A recent report from the Local Data Company suggests that fewer shops are being opened in the UK in 2016 than there were in the previous year. 20,804 shops opened in the UK from January to June this year, a 15% drop on the previous six months. Although the number of shop closures in the same period was also down by 5% from the end of 2015, the net result for the first six months of 2016 was 3 more closures than openings.
The number of retail sites standing empty had been in a general, albeit moderate, decline since early 2012, but began to rise at the end of June which, along with the fall in the number of new shop openings, was partly due to the Brexit outcome, as well as general concerns over the global economy. It is unclear right now whether this is a short-term blip or the beginning of a long term reversal.
So is the high street slowly closing? In July 2016, we reported that sales in the high street were up, likely attributable to the weak performance of the pound in the international currency market. At that time, we questioned what the impact would be on retailers in the long term, and it now seems this was not such a boost.
Matthew Hopkinson, director of Local Data Company, is reported to be predicting that this same weak performance of the pound is likely to be increasing costs paid by retailers, therefore squeezing the profit margins even tighter. Matthew envisages that "Increased costs for retailers, coupled with fierce competition and oversupply of shops is likely to see increased levels of distress and failure among retailers, with survival of the fittest being the order of the day."
Despite the fall in the number of open shops in the high street, 0.1% more people have been visiting the high street in comparison to August 2015. However this is mostly attributable to people visiting restaurants and other nightlife venues, rather than retail outlets, with the number of people visiting shopping centres down 1.9%.
It appears that any uplifting views on the outlook for the high street that may have been held since the downturn are now depleting. However, maybe it is too soon to close the high street forever. A report from British Land in partnership with Verdict Retail, produced inJuly of this year, suggested that 89% of all UK retail sales affect a physical store. The impact of click and collect options and online sales browsed in store prior to purchase means the high street is just as important to retailers now as it was before internet shopping arrived. In fact, it is indicated that click & collect services will double by 2021.
We'll have to wait and see what the impact of the next six months has on the high street and whether the current black cloud hanging over the high street passes, or is the beginning of a storm.