What Happens to the High Street?

The ‘High Street’ in any British town or city is normally the central retail thoroughfare (or CBD) with a mix of large stores and smaller shops with a history going back at least 150+ years. Shops and stores can usually be found on either side of the road. It is not necessarily called 'The High Street', but it often is. In the English Midlands high streets are generally named ‘Main Street.’ Here in Norwich no street is called ‘High Street’ (but there is of course a busy, 'Which?'-rated city centre).Whatever the local reality, the ‘High Street’ is the common term used to discuss city- and town-centre shopping.

A Healthy High Street Needs a Healthy Town

The high street in any town or city forms part of the economy and ecology of the area. A deprived town will have an unhealthy high street. Better design and redevelopment may help to update the high street in many towns, but on its own will probably not be sufficient to revitalise a moribund town centre. Work, jobs, offices universities and colleges is what these places need.

The Shifting Centre

Generally, shopping patterns and street patterns change over the decades. Suburban shopping areas, once quite strong, gave way to city centre comparison shopping in the 1950s and ‘60s. In the same period many family-owned shops could no longer afford the rents in city centres and moved out or closed down. Their sites were taken over by the growing multiple chain stores. City-centre  supermarkets closed down and grocery shopping moved away from central areas in the 1960s and ‘70s to the suburban and to edge-of-town supermarkets (Bamfield, 1980). City-centre shopping in places like Nottingham gradually moved down the hill, following changes in transport, population movement (demolition of inner-city slums and movement of middle classes to the suburbs and countryside), and by the siting new shopping malls on the southern and eastern edge of the city centre.

Oxford Street, London

Oxford Street is the largest and most valuable shopping street in Britain or indeed elsewhere in Europe. It is 1.2 miles long and has around 300 retail premises, dominated by large department stores and 90 flagship stores. It is so well known that it is cited in popular songs by groups like Coldplay (also covered by Kylie), The Jam, The Fall and Bill Bragg. Classical music has got into the act as well. The First Movement of Eric Coates' London Again' is 'Oxford Street March. As early as 1830 Oxford Street was primarily retail (Sheppard, 1980). Some private houses remained and many employees and owners lived above their shops in the nineteenth century. Today many of the famous department stores are in trouble. Debenhams is closed, Bhs has gone, the House of Fraser is being revamped, John Lewis is to become a mixed-use facility (four floors of retail and three of offices) and M&S wants to knock its existing buildings down and start again. Selfridges has been sold by the Weston family. Westminster Council have adopted a policy for Oxford Street of ‘retail only’, thus preventing any attempts to reintroduce residential accommodation back into the street. So retailers that think they have too much space in Oxford Street can only change retail into restaurants, gyms, offices or similar.

M&S CEO, Stuart Machin, has condemned what is happening to Oxford Street, saying ‘An iconic London Street is on its knees and is at risk of becoming a dinosaur district’. The M&S plan to raze its flagship store, replaced by a 10-storey building with offices, a gym, a pedestrian arcade and a smaller shopping area seems to be the right way to go in order to help get Oxford Street back on track. We don’t often support the demolition of old buildings. But make an exception here. In contrast we firmly support the attempt to save the fabulous art-deco black Burton building in Hull as mixed use: this also seems right (Smith, 2022).

In 2020, the first year of covid, total retail sales in Oxford Street are believed to have fallen from a cumulative £10bn to £2bn, and in 2021 sales only rose to £5bn. Like many high streets, Oxford Street is looking increasingly fly-blown. The fact that 30 US Candy Stores have been allowed to open has proved to be a real surprise. They look gaudy and tatty. Who runs these shops is unknown, according to Adam Hug (leader of Westminster City Council). The Council is chasing many of these stores for unpaid Business Rates of £7.9m (Hug [2022]) and has found that at least some of the products they sell are unsafe. For more information, read Hug’s article: you will find it worth it.

So, if the most expensive shopping street in Europe is in danger, what are the problems faced by other high streets?

Online Retailing

Internet sales have steadily risen since the 1990s and had reached a fluctuating market share of between 18% and 19% by 2018-19 (ONS, 2022). This average comprised not only pure-play etailers like Amazon, ASOS and Very, but also the online divisions of shop retailers such as Next, John Lewis, Tesco and Marks & Spencer.

During the pandemic when many shops were closed, online retailing soared, reaching a market share of 32.6% in November 2020. However the following July its share was down to 25.5%. The same pattern occurred each time there was lockdown (or the threat of lockdown). Online sales rose, but customers went back to shops when they reopened. There was a rachet effect: internet sales did not return to the levels of 2019, but to an average around 25%-27%. However, as explained in our 2013 report, Retail Futures 2018, an internet share of one-quarter or more of retailing means that we have too many stores and many more need to be closed permanently to ensure that the stores which remain can be vital and worthwhile.  

Car Parking

Antagonistic to private transport as they can be, councils have used parking charges as a cash cow that has driven shoppers to supermarkets and retail parks that have convenient and often free parking. Making it easier and cheaper to park should be a priority if the high street is to work as a retail environment. This not only means parking for people who want to do some shopping or even make a day of it, but should also cover people who want to pop into town, pick up a newspaper and drop off the dry cleaning without either having to pay £2 for the privilege or risk a heavy fine. Traffic wardens have to change from being quasi police to being people whose value is measured by the ease of the traffic flow surrounding the high street and the way they make the lives of shoppers easier. The Portas recommendation that local councils should experiment with various free (or low cost) parking options was one of her most important proposals (Portas, 2011).

Changes in Use

High streets have not been unchanged in the past twenty-five years. There has been a lot of redevelopment and the creation of new stores and shopping centres. Many shops have changed their use from retailing goods to becoming coffee shops, restaurants, hairdressers, nail bars, wellness clinics, beauticians, gyms, bistros and cafes just as their predecessors 50 years previously changed from being bakers, radio shops, family grocers or cycle shops to becoming TV retailers, record shops, electrical goods specialists, car accessories, insurance companies, estate agents or travel agents.   

This change in the pattern of use of high streets – away from simply comparing and buying retail goods to using health and beauty specialists and/or socialising with others in coffee shops, bars etc is potentially important in understanding the future of high streets.

Voids. ‘Voids’ is the classy word used in the business for empty unlet properties. There will always be some unlet properties, around 3% as companies come and go every year and rarely move into a store the day after the previous retailer has left. Voids have increased from 11.1% in 2018 to an average of 15.8% in 2021,H1 (January-June), according to the LDC. In 2021, there were 17,219 chain-store closures and only 7,160 stores opened.

In terms of voids, retail parks are outperforming both high streets and shopping malls. In 2021,H2 (July-December), the proportion of voids were:

Retail parks                         11.3%

High Streets                        14.4%

Shopping malls                  19.1%   [source: LDC]

There are strong regional variations with 1 out of 5 shops in the North East being empty. High streets in smaller, economically-challenged towns and cities are particularly badly affected.

Covid and Footfall

Most non-food stores were closed completely during the Covid lockdowns. People kept away from high streets because most shops were closed, but also there were concerns about catching covid from other customers or from germs left by other people on counters, stairs or cash. Hence even the high-street shops that were allowed to open in lockdown suffered poor sales, because footfall was so low. In January 2022, footfall was 17.1% lower than January 2020 and still has not picked up much. By mid-2022, retail sales volumes had fallen by -3.9% during March-May 2022 compared to the same period in 2021 and May’s 2022 sales volumes were -5.7% lower than April (ONS, 2022).

The high streets of few towns and cities have recovered their previous footfall levels of 2019, which themselves were 8% lower than 2012. Footfall in currently running at around -12% lower than the period 2017-19 and in major shopping destinations such as London, Birmingham, Manchester and Edinburgh it is generally more than -20% lower.

Working From Home

During the covid lockdowns most people worked from home (WFH), except those in industrial/manual occupations or in consumer-based work such as retail, hospitality, personal care and health. Since the end of lockdown 3 it has proved difficult to get employees back to work for five-day weeks and many now work from home between two or three days a week. Whatever this means for the individuals concerned it has created great problems for retail and hospitality which only now realise how depend they were on people coming out from work to buy snacks or books, to eat in restaurants and cafes, to shop at the end of the day or meet colleagues or family after work for entertainment or a meal.

Unless more people return to work in offices in central business districts it is unlikely that the current number of shops and stores in major shopping centres can survive. Footfall in Central London is not more than 70% of what it was before covid.

Failures of Key Retailers

The failure of well-established retailers over the past ten years has reduced the attractions of the high street. This is particularly true of department stores, which are magnets for the high street and shopping centres, but it has meant that many high streets are now missing the wide variety of stores that once brought in shoppers. Recently Arcadia and Debenhams vanished from sight practically overnight. Fashion/clothing was particularly affected by covid, because working from home (WFH) meant that smart attire was no longer required and new clothes were no longer needed for parties, eating-out and socialising because for most of the time these were banned or discouraged.

Fashion companies that went into administration included:

Victoria’s Secret, Amanda Wakely, Bhs, Brooks Brothers, Peacocks, Kath Kidston, Laura Ashley, Mammas and Pappas, Mothercare, Karen Miller/Coast, Jack Wills, Gerry Weber, L K Bennett, Arcadia, Jaeger, J Crew, T M Lewin, Monsoon/ Accessorize, Quiz, Oasis, Select, Pretty Green, tReds.

Several of these have survived and recovered, even if online-only: nevertheless, many of their shops have gone.

Foreign Tourists

Most major shopping destinations need foreign tourists and spots like Oxford Street, Glasgow, Manchester, Chester, Bicester Village, Chester and Stratford-on-Avon make many sales to foreign tourists. Covid restrictions have kept most foreign tourists away from the UK for the last two years, which has had a depressing effect on the sales of fashion and luxury goods. Foreign tourists, particularly Chinese ones, spend far more than UK tourists on luxury goods: department stores and upmarket stores selling fashion, jewellery, perfume etc in key tourist areas are heavily dependent on foreign tourists and will lag behind until foreign tourists return in larger numbers.

Business Rates, Rents and Survival

We have a whole page on Business Rates. High occupancy costs were once embraced by the retail sector because highly efficient and profitable multiples were able to afford high occupancy costs and hence displace smaller family-run businesses from prime sites. Now that the economics of retailing have radically changed, multiples still face high occupancy costs which do not relate to the much-lower profits and sales now being made. The retail industry which accounts for only 5% of gross value added in the UK economy is actually paying 25% of all business rates, around £8.5bn. This figure represents 42% of all the taxes retail firms pay to the government. Physical stores pay the equivalent of 2.3% of all their sales to the government in business rates: in comparison, online retailers pay only 0.6%. There is nothing wrong with property taxes, but this property tax impoverishes retailers trading from shops and keeps consumer prices high, at the same time as it subsidises online retailers.

Rents are falling and in Oxford Street are rumoured to have fallen sometimes by 50% from their peak. But this would be exceptional. Business rate though are still based on commercial rents from seven years ago.

If you want high streets to continue, the costs of operating from high streets have to be reduced. There is no points in subsidising towns to revamp high streets if traders are undermined by the current system of business rates.  Our view is that an online sales tax should be introduced, which could be used to offset the rates bills of retailers operating from physical stores.  

Government Policy on the High Street

Government policy (2022) sees high streets as a good thing, but the emphasis is mainly on doing things about buildings. The Levelling Up programmes have also been used to help run-down high streets in the more deprived areas, because that is where many of them are.

  • The Future High Street Fund along with the newer Towns Fund has so far agreed bids totalling £1bn by 100 towns to improve their central shopping areas.
  • A Task Force of retail experts has been put together to provide advice.
  • Heritage Action Zones £40m is available to do up property of historic/architectural value
  • Community Ownership Fund £150m is available for bids from voluntary community groups to co-fund building improvements
  • The Levelling-Up Fund No-one is really sure where the boundaries are to Levelling-up Funds, but there could be probably another £500m available to support redevelopment and innovation in town and city centres.

What Can Be Done About The High Street?

Obviously the high street exists as part of a towns ecology. As we are about to go into a recession this will mean further problems for high street retailers.

There are too many retail stores, so high streets need to be smaller. However the retail comparison shopping streets in major cities should be all right once tourists return and people start working from offices three to four days a week. If Working From Home continues to be the norm, it is difficult to see how central-area high streets, restaurants, hospitality and hotels could continue in their present form. Radical surgery would then be required.

Government policy about high streets mainly focuses on improving the built environment. It is important that high streets look fresh rather than dowdy and unkempt. There needs to be a very varied mix of stores, large and small, multiple and independent, covering most of the main vertical retail markets. The ’15-minute city’ is a great idea (everything you need a short distance away), but it needs careful planning and support. Landlords, whether private or public, need to offer space below cost to attract new players, particularly new start-ups and independents. There is a lot of research showing that shoppers feel that high streets are too uniform with the same shops everywhere. A mix of independents and chain stores, perhaps using ‘pop-up’ shops or ‘shops within shops’, to bring more people in and make a more interesting retail offer. Retail spaces can also be used much more as public spaces for vaccination and health care, as mini town halls, or as art galleries and museums.

There is plenty of unused space on Britain’s high streets. More than half of the stores of Bhs (which collapsed as long ago as in 2016) are still unlet and 80% of Arcadia’s stores remain empty. Added to this total are empty department stores from Debenhams, House of Fraser and JLP. Most of these are a nightmare as there are no longer retailers wanting to fill them up. They will need a lot of modernisation and spending on lifts and escalators: they are just too big. The older ones will be Grade II listed and have pillars and columns which make a revamp very pricey, the 1950-1960 versions will have asbestos and reveal the limitations of building standards in that period. Most of these buildings remain as gap-toothed phantoms in high streets reflecting a world of retailing that no longer exists. They really need to be turned into residential accommodation, offices, gyms or experiences that keep people coming into the town centre and its high streets.

And, above all, the system of business rates needs radical reform: otherwise many retailers will not be able to operate.

 

References

Bamfield, J A N (1980) ‘The Changing Face of Retailing’, National Westminster Bank Quarterly Review, may, pp. 33-45.

Bamfield, J A N (2013) Retail Futures 2018, Nottingham: Centre for Retail Research.

Hug, A. (2022) ‘Where did all those US sweet shops in London come from? The problem is, we don’t know’, The Guardian 4 July 2022, https://www.theguardian.com/commentisfree/2022/jul/04/us-sweet-shops-rip-off-customers-business-rates-owners

ONS (2022) Retail Sales, Great Britain: May 2022

Portas, M. (2011) The Portas Review An Independent Review Into The Future Of Our High Streets, URN 11/1434, London: Department for Business, Innovation and Skills

Sheppard, F H W (1980) ‘Oxford Street: The Development of the Frontage’,  British History Online, https://www.british-history. ac.uk/survey-london/vol40/pt2/pp171-173

Smith, M. (2022) ‘Wykeland reveals plans to breathe new life into landmark former Burton building’, Bdaily News, 5 July, https:// bdaily.co.uk/articles/2022/07/05/wykeland-reveals-plans-to-breathe-new-life-into-landmark-former-burton-building

 


Need to know more?

If you need more information about Centre of Retail research please us our contact form to send us a message

Check Out Our Blog

Learn what's new in the world of retail, and keep up to date with retail disruption, crisis, challanges, events and crime.