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Wednesday, October 28, 2020

UK High Streets at Risk

The British high street has been under threat from online retailers for quite some time. A new survey conducted by Springboard has shown that the situation has been made substantially worse by Covid-19 and the national lockdown. The study has shown that in July 10.8% of UK shops were vacant. This is an increase from 9.8% in January 2020 and is the highest rate since 2014.

In March, Next CEO Simon Wolfson warned that the UK high street is facing a crisis “unprecedented in living memory”. Seven months on, it seems as though Simon’s words were predicting what was to come. Retailers were already under threat from online businesses and struggling with high business rates and taxation. Additional concerns surrounding Coronavirus restrictions and the national lockdown in March has meant that large chains such as Cath Kidson, Debenhams, Pret A Manger and M&Co have announced closures. Marks & Spencer, John Lewis and Boots are among household names also currently considering store closures.

The story is the same for smaller businesses. A survey of UK small and medium businesses from McKinsey & Company found that one in four were concerned about defaulting on their business loans and 24% had doubts about being able to retain all of their staff. In addition to this, 80% reported that their revenue was declining. A stark contrast to 80% who reported revenue growth in 2019.

The latest figures show that customer footfall was down 30.8% in August compared to August 2019. In May 2020, one-fifth of all sales were made online. High street retailers have tried encouraging shoppers back by slashing prices. On average, prices for non-food items were down 3.2% in September. 

Although the picture is bleak across the country, the situation appears to be worse in London and across city centres. The vacancy rate rose in 6 out of 10 areas across the UK, but in Greater London, the figures rose by two thirds between January and July 2020. 

Helen Dickenson from the British Retail Consortium has warned that the government “will need to act fast” to avoid more closures and job losses, saying “unless businesses and government can successfully persuade office workers back into city and town centres, some high street retailers will be unable to afford their fixed costs”. 

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