One in four high street shops to close, says report
ALMOST one in four stores on Scotland’s High Streets will disappear in the coming years with the loss of tens of thousands of jobs, a stark report warns today.
The flatlining economy and the explosion of online shopping will result in the loss of 5,800 Scottish shops by 2018 – about three closures every day for the next five years.
The decline in Scotland is more acute than across Britain as a whole as hard-up shoppers tighten their purse-strings, while shops’ operating costs soar, according to the Retail Futures 2018 report by the Centre for Retail Research.
It warns that “Britain has too many stores” and that the future of High Streets in more than 150 towns across the UK is at risk and many may “disappear completely”. Smaller, loss-making “neighbourhood stores” will be worst hit, according to the report.
The warning has prompted criticism of the Scottish Government over the imposition of tax hikes on stores, which business leaders and political opponents say will only aggravate the situation.
But ministers insist they have the best business rates in the UK and have cut these for the majority of commercial premises.
Recent years have seen iconic retail brands including Woolworths, Comet and JJB Sports going to the wall as the UK continues to dip in and out of recession.
The changing face of the High Street has seen the growing emergence of pawn brokers, payday loan stores and pound shops. Today’s report indicates that about 30,000 jobs could go in Scotland, as online sales in the UK become the most lucrative in Europe.
Confederation of British Industry Scotland assistant director David Lonsdale said “modest” economic growth, coupled with a continuing shift to internet shopping, is making conditions more “challenging”.
But he warned: “The Scottish Government’s £95 million retail levy, their £36m rates levy on empty shops and other premises, and their plans for additional red tape in the form of an environmental levy on carrier bags, only make a difficult situation even tougher.”
Professor Joshua Bamfield, director of Centre for Retail Research (CRR), said customers now shop in multiple ways and can make “online price comparisons” between stores with smartphones whilst shopping.
“Retailers have to make clear and strategic responses to the changing pattern of how consumers shop, which includes tactical decisions about store numbers and locations,” Prof Bamfield said.
“They also need to fully integrate these physical stores with their websites, smartphone offering and social media community coherently.”
Scotland has a particular problem with High Streets in smaller towns, mainly in the Central Belt, which are often in smaller, lower-income areas whose previous employment base has “vanished”.
These areas need “radical surgery” to redevelop many hard-to let stores into homes and other leisure developments, it adds. About £320m will be needed across the UK to kick-start this.
The problem of stores lying empty in Scotland – know as “voids” – has trebled in recent years to 15.5 per cent and is higher than England (13.8 per cent).
“There is still considerable uncertainty in many households about future employment and their prospects, and this high level of uncertainty has led to a reduction in the amount they spend,” the report states.
Labour finance spokesman Ken Macintosh said the report’s findings are “grim” and will only increase the concern felt by retail workers.
“There is a real worry that the economic approach by the UK government is making matters worse and they should think again,” he said.
Big supermarkets and superstores will not be affected by the slump and are expected to see a 10 per cent rise. But this will mean small food specialists such as bakeries, fruit and vegetable stores and butchers will be worst hit with a 60 per cent decline. Pharmacies and health stores, DIY outlets, as well as music and book stores will all see a fall of about a third in their number of stores.
Online shopping has soared in the past seven years from 6.6 per cent to 12.7 per cent today. It is expected to increase to 21.5 per cent by 2018.
The report warns this will mean the amount of stores in Britain will fall by 22 per cent by 2018. A total of 62,000 shops will disappear, falling from 281,930 stores today to about 220,000. In Scotland, the amount of stores will fall from 24,855 to 19,050 – a 23.4 per cent decline.
About 316,000 staff will be affected , equivalent to an increase in the unemployment rate of almost 1 per cent. In Scotland, this is expected to translate to about 30,000 jobs. Since the 2008, about 225 medium and large-scale retailers – which employed more than 200,000 workers – have gone bust.
Stuart Mackinnon, a spokesman for the Federation of Small Businesses (FSB), said: “There’s no doubt that the Scottish retail sector, as well as our High Streets and town centres, are going through a period of rapid change. While there will always be a place for independent shops, our changing shopping and living habits mean that both firms and policymakers need to change their approach.”
A Scottish Government spokeswoman said: “Scotland already supports retailers with the most competitive rates regimes in the UK, investing £500m per year and eliminating or substantially reducing business rates for three out of every five commercial properties.”
Tory MSP Murdo Fraser, convener of Holyrood’s economy committee, said the report presented a “depressing forecast”.
Analysis: Town centres are the heart of places and just too important to be left to the whims of the market
There is enormous concern for the future of the “High Street” and the report on Retail Futures 2018 is another addition to a long line of reports on the subject.
In England the Portas Report on High Streets, the Portas Pilots and the odd television show (Mary, Queen of the High Street) have been the subject of much commentary, most recently and scathingly in a UK parliamentary debate last week.
In Scotland, we await the publication of the National Review of Town Centres. And that difference in terminology between High Streets and town centres is, I think, quite significant.
We obviously have a problem; the question is how we look at the problem and then how we think about and implement the solutions.
There is most clearly a structural change going on in retailing and this is overlaid by a recessionary impact.
Retailing has always altered but the move to new formats and the rise of online and mobile shopping and delivery (books, music etc) has raised fundamental questions over the number, type and location of shops we need.
Add to that the very high cost of operating in certain areas due to issues around rates and other costs on the supply side and access and ease on the demand side and we are in a state of change, and will be for some time.
The outcome is a sense of failing High Streets and decay and dereliction in many (but we have to emphasise not all) places.
But retail is struggling beyond the High Street as seen in recent closures and vacancies in shopping centres and retail parks.
And it is not just the retail component of town centres (ie the High Street) that has problems.
Town centres themselves have seen many functions decentralise and close down and are beset by high occupancy and operating costs.
Look above the shops in many towns and you see a similar pattern of neglect and under-utilisation of assets and space.
The solutions lie in investing in and focusing on town centres and seeing these as the heart of places. We have to find ways to make people want to visit town centres, to live, work and play in them, and no amount of challenge funds, quick fixes or TV reality shows will make a sustainable difference.
Towns (in which over half the Scottish population live) are vital to our economic and social success, and within that vibrant town centres, including successful High Streets, are too important to be left to the whims of the market, which as this report notes are leading inexorably to their collapse.
• Professor Leigh Sparks is head of Stirling Graduate School and Professor of Retail Studies, Institute for Retail Studies at Stirling Management School at the University of Stirling