February 2013: Seconds out – round two or is it three, four or even five? Comet, HMV, Jessops, Blockbuster and now Republic have all hit the canvas in under three months. Which retailer will be next to take a killer punch and fall into one of the many guises of administration? And how can we protect our ravaged high streets from further distress?
It’s been a tough five years for retailers. Many have been hit for six by fragile consumer confidence, the growing strength of the internet or through being overleveraged before the credit crunch. Online retail sales captured 12% of the overall retail market in 2012 according to the British Retail Consortium. Many retailers with good multichannel business models are surviving. They are surviving because they are alert to emerging trends and adapt their operations accordingly. For many it is about increasing online channels and rationalising property portfolios, forsaking historical prime pitches for smaller convenience stores. Those that have suffered have been hit hard by changing consumer habits, exacerbated by rapidly evolving technology, and have not been agile enough to adapt their traditional routes to market. Many have paid the ultimate price.
Local Data Company is predicting the country’s 500 busiest retail locations will lose a net 4,000 outlets in 2013 in comparison to 2,000 in 2012. Surely some common sense will have to prevail soon to support distressed retailers whether it be freezing business rates, reducing rents or agreeing more flexible leases. Otherwise we are running the risk of one in seven shops sitting vacant and a national vacancy rate hitting an all time high of 19%.
It is alarming to see so many well know retailers fail and their names lost from the High Street. However, retail is a dynamic industry and a slave to changing consumer habits. All of these vacancies have been filled by other retailers, either upsizing or downsizing. It will be interesting to see if the HMV sites will be speculatively redeveloped by the landlord.
With the number of retailers substantially shrinking, store portfolios reducing and very few new entrants in to the sector, real structural change needs to happen. As calls increase to change the use of voids across the country into mixed-use or much needed residential accommodation, something does need to happen. There are no quick fix solutions but the process must be started to help restore vibrancy and prosperity to our high streets.
Clive Snashall, Partner