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Despite Shop Closures and Vacancies – It’s Not All Bad News for the High Street

Despite an increase in shop closures and 10% of the UK high street now being vacant, consumer spending continues to grow year-on-year. So, what does this mean for the retail landscape?

According to the Office of National Statistics, ( ons.gov.uk) in the three months to the end of June 2019, the quantity or cash value of goods bought by consumers increased by 0.7%. The only slower sectors were food and department stores. Furthermore, June 2019 itself saw an increase over May 2019 by 1%, and against June 2018 by a significant 3.8%.

You will likely have seen the many recent reports of store closures and the high street’s decline, yet this doesn’t seem to add up. What is does suggest, is a change in consumer behaviour. The UK consumer is carefully choosing where to shop, both in bricks and mortar and online. When it comes to bricks, this is often attracted by towns, cities and other destinations that appeal to their taste and respond to their shopping expectations.

How a flagging city revived itself

Let’s take Birmingham as an example, where a coordinated approach led by the Mayor, Andy Street, (himself a former retailer), has shaken up the flagging city and turned it around. Birmingham is one of the youngest cities in Europe, 40% of its population is under 25 and it now attracts 41 million visitors a year.

Conversations held with landlords, transport providers, the local authority and a greater consumer focus groups has driven this revival. Rents dropped, tech businesses relocated into new tax incentive enterprise zones which also provided a larger consumer base, property user limitations were overturned, and formerly ‘dead’ spaces brought back to life. This start-up culture has resulted in HSBC moving its UK headquarters to Birmingham, bringing in 1,000 jobs to the region. Other corporations are now following.

The fashion enterprise Primark also invested in the city, where it took over a failing shopping centre by persuading the landlord to allow a five-floor retail experience that occupies 160,000 square feet. They wanted to create a ‘new feel’ department store that would excite and inspire. There are floors just devoted to fun activities for kids, including Disney’s first officially licensed café featuring a Mickey Mouse entrance and digital tables where children are able to play games, a barber shop, a beauty and hair studio, and a licensing collaboration with the Harry Potter brand - and the combination has worked brilliantly. The combination of these propositions with the fair-trade food and beverage offer will attract footfall and gives Primark a way of standing out from its competitors.

It is initiatives like this that will revive consumer’s appeal to bricks-and-mortar retail. The store cost Primark around £70 million to design and build.

Why it’s not all bad news for UK retail

Ventures like these have boosted private sector investment and made the area a leading region outside of London to attract foreign direct investment. Last year more people moved to Birmingham than left, while the city and its new railway station has become unrecognizable from how it looked thirty years ago. All of this proves conclusively what enterprise, vision and determination can achieve and that the strategic ‘shake up’ is working.

Andy Street recently said, “young Londoners are voting with their feet”, and although he is humble when he says it’s not all down to him, what it does show is that unless there is a passionate knowledgeable person in control who is respected by the overall business and other communities, then the dream won’t happen.

The surprising area of flourishing retail

Another example of enterprise and vision and supreme merchandizing is the flourishing retail scene in museum shops. The shops are excellent and provide a huge range of goods from fashion to home products, books, stationery, art materials to ceramics, and more.

Over 45 million people visit UK museums every year, with museum shops accounting for a significant portion of UK retail sales. There are no precise sales figures available for the consumer spend in museum shops but if only 10% of visitors spend an average of £10 then that amounts to £45m, certainly more than 10% of overall consumer spending.

It is no surprise to me then, that retailers who have failed to keep their propositions relevant and focused, as Museum shops do, are much more likely to fail. Of course, as the Birmingham case shows, it also depends on the approach by many local authorities to the malaise of their high streets - and the current lack of tackling the issues head on and accepting the new retailers on the block.

In summary, it’s not all bad news - it’s far from it. As outlined in The Retail Start-Up Book, look for areas where the realities have sunk in and where your start-up will have a greater chance of success.

Source material:

(Birmingham) Financial Times article, 9 August 2019 (William Wallis)


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