Follow Us On Twitter
Union Building, Rose Lane, Norwich NR1 1BY - telephone: 0845 122 7058 (Int: +44 84 51 22 70 58) - e-mail: research@retailresearch.org
Retail at bay 2018
Read about the Global Retail Theft Barometer Dissecting Store Crime
Tell a friend about this page.

Retail At Bay 2018 - New Report

RETAIL AT BAY 2018 is a new report from the Centre for Retail Research, published in May 2018. It updates CRR's 2013 report, Retail Futures 2018 which forecast that by 2018 one-in-five stores open in 2013 would have closed. To get a full copy, see end of this webpage.

Retail At Bay 2018

Retail at bay report - 2018

IS THERE A RETAIL CRISIS?

2018 will probably be the worst year for bad retail news since the recession in 2008, when Woolworths collapsed. In the first 100 days of 2018, 18 large and medium-sized retail companies collapsed into administration involving almost as many stores and certainly more jobs (13,500) than in the whole of 2017. Six retailers are using CVAs to close 286 stores (6,000 employees at risk), the Homebase group has been sold for £1 (11,500 jobs at risk) and other retailers including M&S daily announce closures and partial retreat.

The crisis is really two crises: one is the rapid decline and loss of market share of many well-respected store groups; and the second is what this means for high streets and town centres that since the war have been built around the needs of major retailers.

Seven years after Portas, the government seems passive about the whole thing, uncertain what to do about the potential closure of thousands of shops, redundancy for hundreds of thousands of employees and despoilment of town centres.

EATING AWAY AT RETAILING INFRASTRUCTURE

THE GROWTH OF ONLINE RETAILING

Figure 1

actual and forecast graph

CHANGES IN STORE NUMBERS

We estimate that around 10,000 stores will close in 2018 and, as a result, the number of stores still in the retail industry will be more than 317,000 (Table 1). This marks a total fall of more than -71,000, equivalent to an -18.4% drop in stores. This is admittedly slightly lower than the proportionate drop we projected long ago in 2013, but by 2019 the forecast should come right.

Table 1
Totals Store Numbers 2012-17 and 2012-18

Totals Store Numbers 2012-17 and 2012-18

STORE VACANCIES

Store vacancies now according to Local Data Company (LDC), the standard now for measuring vacancies, have been running at or about 11.9% for some time, though they hit 14.3% in 2011. The vacancy rate in Scotland seems to have improved in recent years, although Wales remains a problem. Store vacancies at a regional level inversely reflect regional incomes and spending: with a few exceptions the more prosperous areas, such and London and the South East, have lower vacancies in their shopping areas, the less prosperous do not (Fig 2). 26% of vacancies have been empty for four or more years.

Figure 2

store vacancies by region 2017
[derived from LDC data]

STORE NUMBERS

The pattern of store numbers in the UK (Fig 3) shows a general fall in the period 1950-70 caused by slum clearance and the replacement of small independents by larger chain stores, then these in turn were replaced by larger grocery and nonfood stores and by large scale town-centre redevelopment. Since the mid-2000s, there has been a large drop in store numbers. Many retail stores have become restaurants, coffee shops, hairdressers, tattoo parlours and wellness clinics.

Figure 3

number of retail stores 1950-2018

BUSINESS RATES

Business rates are a major cost now for bricks-and-mortar retailers, but not for online businesses. Business rates are the equivalent of 2.3% of bricks-and-mortar retailers' sales and 0.6% of online traders' sales and prevent shops competing effectively with their online rivals. This year, traditional stores are expected to pay £7,168mn in business rates for 2018-19 and online retailers only £457mn (6% of the total retail rates bill).

The report recommends government action now to replace business rates with a new measure calculated by (a) revised business rates, without exemptions, plus (b) a turnover tax as a short-term more equitable measure, which is non-discriminatory, reduces the rate bills of independent retailers having lower sales, and increases the rate bill for online traders to a level comparable with shop retailers.

THE HIGH STREET

High streets are a vibrant and important part of town centres. In 2000, high streets were responsible for 50% of all retail spending. Our research found this was now 36.6%.

High streets need to change from being primarily retail-led to becoming a leisure-and-entertainment focus with an important retail presence.

HELP FOR HIGH STREETS. The success of every high street is linked to the success of its town or conurbation. If they are declining then the high street is likely to be declining. New strategies are needed particularly for the areas facing the greatest decline.

PUMP PRIMING FUND. We recommend that a pump-priming fund of £450 million be set up to support high-street re-engineering. This would encourage large property companies and local councils to get involved strategically in developing town centres through micro-projects, turning failing or empty stores into successful places or residential accommodation. Perhaps 15,000 - 20,000 new homes could be created over four years, buildings modernised, vacant or under-used buildings developed, former retail outlets converted into successful service-based units or small office facilities, spaces for entertainment/leisure, doctor's surgeries, classrooms and meeting rooms.

The new leisure-and-entertainment economy is not just a matter of announcing a new policy, it needs management. The civic authorities also need to ensure they do not overreact to retail's problems by allowing many essential retail businesses that could be retained to leave the high street.

FORECAST 2022.

Retail At Bay 2018 does not take the view that eventually every store will close and every high street abandoned. New uses will be found for existing retail outlets combining the advantages of online retailing with the advantages of shopping in stores. Retail stores will remain an important, although smaller, part of retailing in high streets, malls and retail parks as online continues to grow.

We feel there is a danger that, left to itself, with no government action and no extra funding and zero action on business rates, there will be an overreaction to current problems - excessive store closures and too many high streets abandoned.

TO GET HOLD OF A COPY OF THE REPORT………..

Please send an email to research@retailresearch.org with subject heading 'Retail At Bay 2018' (it does not need to be precisely that) and we will send you the address from which it can be downloaded. Please don't telephone. There is no charge.

If you wish to cite the report, this should be (in your preferred version of the Harvard system) as

Bamfield, J.A.N. (2018) Retail At Bay 2018 Report, May, Norwich: Centre for Retail Research.

retail at bay 2018 report







Previous Reports












top ^^. design by chant 4