THE Christmas lights are being switched on in towns and cities across Scotland but there are fears this might not signal the beginning of a traditional festive spending spree by shoppers.
Sir Philip Green, the chief executive of Arcadia, last week confirmed that his struggling 2,500-strong store portfolio, which includes Burton’s and Top Shop, would be decimated within three years as lease breaks came up. Investors are now also placing bets as to which other retailers are set to join the high street scrapheap of Woolworth’s, Zavvi, Habitat, Roseby’s and MK One.
But a chorus of voices has emerged insisting that the high street is not dead – if concerted action is taken to encourage reluctant shoppers to return.
Some argue that the answer lies with landlords being more flexible, councils dropping at least some parking charges and the Scottish Government rethinking its rise in business rates or introducing “retail enterprise zones” in towns such as Kilmarnock, Dumbarton and Helensburgh where high streets have been identified as having “failed”.
Property specialists have also called for more pro-active strategies to attract happy crowds with their credit cards in hand. John Duffy, head of in-town retail at property firm Colliers International, said public events led by local councils would be a good start.
Duffy says: “Paisley had its Christmas light switch-on a fortnight ago, and they attracted 37,500 people to an event in the town centre. That is 37,500 people that wouldn’t have been in Paisley if that event hadn’t taken place. Things like that need to be promoted by councils and the local community to bring people back to the high street.
Richard Dodd, head of media for the Scottish Retail Consortium (SRC) said there are strong shopping centres, such as Edinburgh and Glasgow, but there were many others that face “longstanding and deep-seated problems” that have been made worse by what economists have dubbed an unprecedented reduction in the value of people’s pay packets and a shift to online shopping.
“There has been a failure of investment over the years in making town centres into safe and attractive places people want to go to,” says Dodd.
“These long-standing problems have been compounded by economic difficulties, with people being short of money and reluctant to spend what money they have got. The current situation is making a problem that previously existed worse. So we can’t assume that once job prospects and confidence improves, that all the difficulties will go away.”
The SRC said that on Tuesday the Chancellor has a chance to directly help the retail sector by scrapping fuel duty increases and rolling back the 5.6 per cent rates increase which are all due to hit next year.
Retailers also have to make their own magic happen. Dodd recommends local retailers collaborating in pinpointing “niche and distinctive” offerings of unique products and services as well as making the most of local heritage.
Since 2009, the SRC’s sister organisation, the British Retail Consortium (BRC), has been running “high street rescue plan”. The BRC report, entitled 21st Century High Streets: A new vision for our town centres set out a 20-point plan for “securing the long-term future of town centre retailing well beyond the end of this recession”.
The report highlighted various initiatives such as that in Chester, which addressed declining afternoon footfall by making some car parks “Free after 3”. There was also Swansea’s annual Independents’ Day to boost independent traders, as well as Dundee’s annual retail awards.
Belinda Dickson, the owner of Edinburgh’s luxury cashmere specialist Belinda Robertson, suggested events where local retailers could band together to offer free champagne, late openings, and again, free parking. “It is tough out there. The retail face is changing,” says Dickson.
“We used to have an evening where we were all open late and everyone served champagne and you could walk from one shop to the other with your glass. We had carol singers and you made an evening of it. And that worked. People would come and shops would run discounts for the evening. People want to feel they are part of something.”
She noted that on Friday – known as Black Friday – thousands of shoppers across cities in the US waited outside stores including Macy’s from midnight to mark the opening of the Christmas shopping season. Dickson likes the idea but parking problems, particularly related to Edinburgh’s tramworks, remain a big problem.
“Should it happen in Edinburgh? Why not give it a try? But free parking would make a huge difference in Edinburgh.”
The forthcoming change in rates has come at the “worse possible time” for retailers, said Peter Muir, director of rating for Colliers. He said rates which were based on the value of rents in April 2008 were too high now when circumstances are much worse.
Muir argued that if the Scottish Government is planning to implement its “Tesco tax” in the form of a health levy, which is aiming to raise £110 million from large supermarkets, it could at the same time reduce rates for smaller retailers or shops in certain geographical areas, creating “retail enterprise zones”.
Muir said: “It might be that under a certain rateable value the Scottish Government could reduce poundage in certain areas. Paisley is on its way back but the likes of Dumbarton and Helensburgh used to be booming before the big centres came along. It could be possible to put into the finance legislation that certain amounts be taken out of the rates poundage with a view to getting occupiers in there.”
The outlook for a number of retailers in particular is bleak. Yesterday, outdoor goods retailer Blacks Leisure became the latest retailer to issue a profits warning, saying trading conditions had weakened further in the past few weeks.
Shares in the company, which sells walking boots, camping equipment and ski jackets from 306 Blacks Outdoor and Millets stores employing 3,500 staff, slumped after it also said it needed to raise cash from investors.
Other retailers facing problems include HMV, which reported a £122m loss for the year ended 20 April, while its net debt had more than doubled to £171m. Although the firm managed to arrange a new borrowing facility with lenders to September of next year, this is conditional on the successful sale of its book chain, Waterstone’s.
JJB Sports also came near to collapse after a tough Christmas in 2010, and this year had to raise £96m from investors and agreed a company voluntary arrangement with landlords to shut some stores and keep others. It too agreed an extension to its lending facilities to May 2014.
Clinton Cards last year managed to reduce its debt from £36m to £24m, but in September it was forced to negotiate a week’s delay in paying for part of its rents while its £50m lending facility only runs to January 2012.
Gloom-mongers had predicted that September quarterly rent payments would be the final straw for some retailers, although the predicted bloodbath did not occur. But there continues to be concerns that if landlords were holding out for a good Christmas, the ones that don’t fare so well might yet have the rug pulled out from under them as the rent becomes due in December.
Duffy said: “Rents are historically too high and there is an understanding in the property industry that rents don’t go down – they have to go down, or you will just end up with more vacancies.”
But there were also hints that maybe folk were waiting – saving up their pennies for a special Christmas that was festive enough to dispel the gloom. But even if they’re eventually persuaded to part with their cash many of them will spend it online. A report commissioned by online retailer Brand Alley found that 59 per cent of Christmas shoppers were planning to do the bulk of their shopping on the internet.
A recent ONS report found that while only one pound out of ten is spent online, the rate has trebled since 2007 and spend is expected to double to £40 billion in the next four years. Tomorrow, on “mega Monday”, Visa predicts that £303m will be spent online using its cards, the busiest day of the year for internet retailers.
Shoppers may still be ready to part with the cash, but not necessarily in the shops.