The first half of 2016 has seen the decline of new stores on the high street and in shopping centres, resulting in the lowest number of new stores opened since 2011. A report produced by PWC and the Local Data Company evaluates shops performances for the first half of this year, in conjunction with looking into the collapse of BHS into administration. It found that only 2,153 new stores opened in the UK in the first six months of the year. In 2011, only 1,809 shops were launched. Although this number does not match the painfully low figures of 2011, it does serve as an indicator of the mentality and buying power of shoppers this year.
2016 has seen a trend towards online shopping as opposed to visiting and browsing in stores. Fashion businesses appear to have suffered the steepest decline in the period between January and June. There were 87 net fewer stores. Focussing on clothing in particular, clothing retailers opened 119 stores during the same period; however, 206 stores were closed. Following this trend, Gap announced last week that it would be pulling its Banana Republic brand out of the UK. Although this will only result in the closure of 8 shops, it still shows the shaky confidence placed in the British high street by overseas retailers.
Interestingly, tobacconists have profited out of the poor high street market, with net increases of 28 in the first half of the year. Estate agents and jewellers have also increased in size, adding 26 sites and 24 sites respectively.
Shoppers have been spending less on the high street, as a general downwards trend, since the financial crisis. Consumers are spending an average of £700m less on clothing, shoes and accessories this year when compared with 2015. These could be considered "luxury items" and are certainly not within the category of necessities. With household budgets being squeezed ever tighter, the first items to be cut from the monthly shop will be those that aren't required. In addition to a fall in demand for clothing, shoppers are also more keen to spend online, reducing the demand for a physical retail space. This will certainly have impacted on the number of shop closures in the first half of this year.
The lack of demand has provided retailers with a further problem: excess stock. Retailers will base their orders on the previous year's demand. The fall in demand has resulted in too much unsold stock. In an effort to shift some of this, shops have been holding mid-season sales. However, with the general apathy towards the high street, it is doubtful whether these will have been successful in tempting shoppers off their sofas and laptops and back into stores.
The decline of shops on the high street has mirrored a growing trend in retail; the closure of physical retail spaces in favour of online services. It is undoubtedly cheaper to provide services via the web, and the rising price of retail spaces and the new national living wage have contributed to increased running costs for shops. This, coupled with the lack of demand and the general poor performance of physical retail outlets over the last 6 months, has led retailers to conclude that moving online might be healthier for their profit margins. The rate of closure for stores was 15 a day for the first part of this year. This is up one from 14 a day in the same period in 2015.
A medley of factors appears to have led to the decline of the British high street. Although it is an exciting time in the world of online retail, the impact that the closure of physical stores will have on jobs and local economies can only be described as negative