Blood on high street as Green closes 260 stores

THE declining state of Britain’s high streets was brought into sharp focus yesterday with the announcement that Arcadia, the owner of Top Shop and BHS, is to close up to 260 stores over the next few years.

Like all retailers, the fashion brands owned by Sir Philip Green are facing severe challenges due to the toughest economic climate for decades and the rise of online shopping – a phenomenon with the potential to change the face of Britain’s traditional town centres for ever.

The closure of so many stores in an empire that also includes Burton, Evans and Miss Selfridge underlines the structural change that is radically altering the way that people shop.

When he announced a 40 per cent slide in pre-tax profits to £133.1 million yesterday, Sir Philip said “from memory” there were up to 460 stores where leases expire in the next three years.

He added: “We will close more than half of those on lease expiry, so I would say I would expect us to close 250, 260.”

The dilemma for Sir Philip and others is whether they should continue to pay out large amounts in rent to maintain a high street presence when so many people are choosing to do their shopping over the internet.

The drift to online shopping was also in evidence in reports suggesting that Kate Bostock, the head of M&S’s clothing and homewares business, was in talks to take a senior job at British online fashion retailer ASOS.

M&S’s chief executive, Marc Bolland, declined to comment on what he described as “press rumours”, but talk of a move from a traditional store to an online organisation is typical of the changing trends that are revolutionising shopping habits.

Despite the economic crisis, the number of people choosing to buy items such as clothing online is growing steadily. The latest statistics produced by the British Retail Consortium showed that online sales for non-food items, including clothes, grew by 12 per cent in October.

That figure is not as high as it was in December 2009 when growth of 25 per cent was recorded, but it is still well in front of sales growth as a whole, which was 1.5 per cent for the UK in October and was negative in Scotland at -0.1 per cent.

A survey looking ahead to the festive shopping period found that 63 per cent of Scottish consumers intended to spend the same on Christmas this year as they did last year.

However, according to the BrandAlley poll, 59 per cent of them will be buying more than half of their gifts online.

In the meantime, retailers and credit card companies are bracing themselves for Monday next week, which they predict will be the busiest online shopping day yet.

Already christened “Mega Monday”, Visa Europe predicts that £303m will be spent online with plastic cards that day.

According to Christine Cross, the chief retail adviser at PwC, online sales presents a “huge challenge” to retailers and town centres.

“We are seeing a big growth in online shopping,” Ms Cross said. “In the future, we are going to see fewer stores in the high street and those that remain are going to have to be really good.

“They will have to demonstrate a bit of retail theatre, because everything is so glitzy these days.”

She said she thought that big shopping streets such as Oxford Street in London and Princes Street in Edinburgh will not look too different in ten years, although she thinks there will be more malls in city centres with food courts and cinemas to attract shoppers.

“Shoppers will see what they want on display and then go home and order it online,” she added.

“High streets in smaller towns are going to change dramatically. They are already dominated by banks and charity shops. Banks are pulling out of their retail operations, so that just leaves charity shops. I cannot see the little fashion shops that you find in smaller towns surviving.

“I think the whole shift in location and property is going to be the big retail theme of next year.”

However, the good news for lovers of traditional shopping is that there is still a very long way to go before online sales overtake conventional trips to the high street.

The proportion of retail sales that takes place online is rising, but still less than a tenth of the total.

Figures from the Office for National Statistics show that 7.1 per cent of total shopping was done online in July 2010, rising to 9.5 per cent in October this year.

According to Richard Dodd of the British Retail Consortium, that is why retailers must strive to achieve a balance between internet shopping and their high street stores.

“I don’t think it is necessarily about one method undermining the other,” Mr Dodd said.

“It is about retail businesses developing this additional route [online] for their customers. A lot of people are doing their research online, ordering it online and then picking it up at the store.”

What about the customers themselves? Sinead McKay, 33, who works in recruitment, saw the benefit of shopping for clothes over the internet.

She said: “Often you get a much better selection when you go online. There are millions of outfits online, but you can’t display millions of outfits in a shop. But if I was buying something for a special occasion I would rather go to the high street where you can see it and try it on before you buy it.”

Jenny Stewart, 26, who works in communications, said: “I much prefer going into shops. I bought a couple of dresses online and they didn’t look anything like the picture and I was really disappointed and I sent them back.”