January 17, 2020
When the world’s oldest tour operator Thomas Cook dramatically collapsed in September, it was another flashpoint in a decade of decline on the UK’s high streets.
Collateral damage in the company’s financial failure, its retail stores were almost immediately bought by Sunderland-headquartered Hay’s Travel, bringing relief to thousands of workers across its 555 UK-wide shop estate.
However, the fact remains that in the first six months of 2019, more than 3000 high street stores closed. The proportion of all UK shops now empty is 10.3 per cent.
Thomas Cook aside, high street stalwart Debenhams, House of Fraser and HMV have all been forced to call in the administrators. Meanwhile, huge question marks hang over the longevity of Arcadia Group – which includes Topshop, Outfit and Burton – and Marks and Spencer, which recently dropped out of the FTSE 100.
The casual dining market hasn’t escaped either, with Jamie’s Italian, Byron, Gourmet Burger Kitchen, Prezzo and Patisserie Valerie all suffering.
In total, the number of new retail openings in the last 12 months was 43,278, compared with 50,828 closures.
This time last year, the Government published plans for a Future High Streets Fund (FHSF), focused on addressing the growing crisis facing town centres.
An initial £675 million was increased to £1 billion just a few weeks ago.
The FHSF has been created to help high streets evolve and adapt to the new order of things, and the policy paper identifies a number of structural changes and what projects will be funded to turn things around.
One of the areas it will look to address is how to compete against the rise of online spending.
In 2000, online retailing accounted for less than one per cent of retail sales whereas in August 2019 it was 18.2 per cent.
Online retailers have a clear advantage over their high street counterparts, since without the bricks and mortar overheads they can offer more competitive prices and greater convenience.
However, consumers now want something from the high street that they cannot get online – an experience and a sense of community – and a recent research from Public Health England says high streets can still flourish if they meet certain conditions.
Those well designed from a transport and built environment point of view, and which have a wide choice of retail, residential and office space are best placed to adapt, says the report.
The FHSF will provide investment to improve physical infrastructure for public and transport access and support new housing and workspace developments. The restoration of historic buildings will also be prioritised.
Announcing the extra £325 million for the fund, Prime Minister Boris Johnson said: “Our high streets are right at the heart of our communities, and I will do everything I can to make sure they remain vibrant places where people want to go, meet and spend their money.
“But with our town centres facing challenges, we’re today expanding the High Streets Fund to support over 100 high streets to regenerate.”
Other incentives, such as cutting business rates by a third for up to 90 per cent of retail properties on the high street, have also been announced, as well as the creation of a High Street Task Force to consult on planning reform and deliver advice to community leaders.
While Government support is clearly welcomed, many argue what’s being proposed does not go far enough.
A recent inquiry by the Housing, Communities and Local Government Committee claims the large-scale structural changes needed to revive the high street will require a much bigger intervention.
Local authorities, it says, need more support to ease financial pressures as they seek to regenerate town centres, while it also uncovered huge disparities in business rates paid by online retailers compared to their high street counterparts.
Amazon UK’s 2018 business rates, for example, amounted to just 0.7 per cent of their UK turnover, whereas those with physical stores paid between 1.5 and 6.5 per cent.
In the North East, we don’t have to look far to see the scars of the high street crisis.
Analysis by PwC shows Newcastle had the highest number of store openings in the region this year, with a paltry net increase of two.
The report also notes Sunderland saw a reasonable number of
store openings, despite experiencing a net loss overall. Patrick Melia, chief executive of Sunderland City Council, says the FHSF “could be truly transformational.”
“The fund is unique in that it provides capital specifically for improving pedestrian and vehicle flow into city centres – which we know from talking to our own local businesses – is a real issue for many high street operators,” he adds.
Sunderland has made the final shortlist for funding through the FHSF and the council is hopeful it can secure funding to “re-invent” its centre.
“It’s vital that we have initiatives in place to ensure high streets have everything they need not only to survive, but to thrive,” says Patrick.