Two and a bit years ago, it was the demise of Woolworths; this week, the predicament of the British high street has been reflected in the increasingly uncertain fate of HMV. Yesterday it emerged that British retail sales across the board had suffered their worst December since 1998. And in the wake of profit warnings and a plunging share price, HMV’s suppliers have been cutting back credit, debt advisers have been called in to look at the business’s finances, and 60 shops are now set for closure – including 20 branches of Waterstone’s, the once-thriving high street name that was folded into HMV in 1998, and may now be sold off. This week, a number of record companies announced that they would support the chain by leaving their trading terms unaltered, but the latter half of 2011 could be yet grimmer, because without the additional goodwill of the people who make DVDs, computer games and the rest, it will be almost impossible to build up stock before Christmas.

In response, as with Woolies, scores of voices have been dredging up their HMV memories. You will doubtless have your own: mine go back to the mid-1980s, and endless trips to the two branches on Manchester’s Market Street, where I would habitually buy 12in singles by the Style Council, and wonder whether to spend what money remained on the Redskins, Easterhouse or the Faith Brothers (don’t ask). Of late, as the music industry tumbles towards doom, I have been thrown by HMV’s decision to push music further and further towards the back of their shops in favour of more profitable lines, but have still been gripped by a regular urge to go inside in search of some unexpected musical discovery. Certainly, the idea of London’s Oxford Street without their two signature stores seems very strange.

Yet that may be where we are headed. In countless towns, and parts of our cities, the basic story is simple enough: first, the big chain stores saw off independent shops, but now they themselves are either ailing, or off somewhere else. The result, to use a phrase invented by the New Economics Foundation (Nef), is a passage “from clone town to ghost town”, driven by three factors, much more deep-seated than economic ups and downs, which point to the likely shape of the retail future. First, the rise and rise of the internet – 39% of CDs and 34% of DVDs are bought online, yet only a miserable 10% of HMV’s business happens there. Looking ahead, music, films and games – and, yes, books – will increasingly be downloaded rather than physically owned, and we’ll also see to even more of our personal finances and house buying online (according to the Ordnance Survey, between 2008 and 2011, the high street presence of building societies came down by 29%).

Second comes the ever-growing tyranny of the supermarkets, and third, the retail trade’s ongoing shift from the cramped environs of urban streets to places where the big names can stretch out and keep their customers captive. Increasingly, when you think of Boots or Next, you will not picture a standard-issue, high street shop, but a much bigger construction, either placed within a town centre “retail destination”, or plonked on a ring road in an American-style strip mall built around a vast car park. By comparison, the idea of walking down the street while doing your shopping looks quaint and inconvenient, and the likes of HMV find themselves laid lower and lower.

In February last year, Nef published figures for shop closures in the 12 months up to April 2009. The death of Woolworths accounted for 807 stores. The Stylo group, which owns the shoe chains Barratts and Priceless, had shut 220; 214 Celebrations card shops had gone, and another 125 shops had become empty thanks to the death of the misfiring entertainment chain Zavvi.

There was also bad news from chains such as JJB Sports (55 closed shops), the Officers Club (32), and good old Passion for Perfume (45), and since then, the great emptying-out of the high street has continued. Philip Green’s Arcadia group is set to close up to 300 shops, mostly less-than-sexy brands, such as Burton and Dorothy Perkins. The once-ubiquitous chain Game has announced that 90 of its branches are going.

Every six months, people from a research firm called the Local Data Company walk the streets of around 800 towns and cities and chronicle their fate. “There is a fundamental change happening,” says their business development director, Matthew Hopkinson. “I can’t prove it yet, but that’s my gut feeling.” He mentions plenty of ailing businesses, but also what’s happening to thriving chains. “The big retailers – the Nexts and the Topshops – are cutting their number of stores, and they’re going for big-box formats,” he says. “It’s cheaper to do business that way, and they don’t have to contend with councils. These are controlled environments.

“It’s best to have total control over what the consumer sees, smells and everything else. Because once you’ve got them under your roof, you can manipulate them until the cows come home. And on the high street, it’s very difficult to do that. That’s what the supermarkets have taught us.”

After decades of ceaseless expansion, talking again about how Tesco et al have strangled the high street might seem like a cliche, but as the so-called big four extend their business into lines once undreamed of, it’s easy to miss the potentially momentous consequences. “They’re not really supermarkets any more,” says Hopkinson. “They’re almost becoming mini-villages. You get your milk, bread and all your food, but Tesco is launching places where you can get your hair cut. It’s: ‘Buy your school uniform, go to the doctor – and if you come to us, you get your loyalty points, and it’ll be cheaper than anywhere else.’”

Among other consequences, this means the retail equivalent of the “squeezed middle”, and the likely survival of only those businesses that sit either side of it. “The quality, niche guys – like Burberry – have done bloody well, and the Poundlands and 99p Stores have done bloody well,” Hopkinson adds. “But if you’re in the middle ground, you’re right where the supermarkets are.” For proof of this polarisation, look at recent headlines about some of the few high street businesses that seem to be on the rise. Bookmakers are doing well, increasing their share of the high street over the last two years by 5%. Meanwhile, the 99p Stores chain recently announced that it wants to increase its shops from 138 to 600.

At the same time, an even more pernicious divide seems to be taking root. When I talk to Tim Danaher, editor of the trade magazine Retail Week, he makes a distinction between two kinds of place, and what tumult on the high street means for each of them. The essential divide, he explains, is between such urban centres as, say, Manchester, Bristol and Leeds, and much smaller places, which will feel the pinch: your Tauntons, Grimsbys, Barnsleys and Wrexhams.

“In our top towns, with a handful of exceptions, we’re getting to a stage where the focus of our high street is going to be on fashion,” he says. “But in the secondary towns, who knows? Value retail is growing, but it’ll only go so far. Beyond that, what’s there going to be?”

Empty shops, I suggest.

“Empty shops. That’s right.”

The first panic about increasingly gap-toothed high streets happened in early 2009. The recession was in full swing, and the average shop vacancy rate in towns and cities was forecast to rise to 15%. The independents that remained in urban centres were falling like flies, and the only businesses that were bravely announcing expansion were such titans as Asda, Subway and KFC. There was talk of empty shops being handed to artists, musicians and community groups: in April of that year, the government announced a £3m package to encourage precisely that – though its effects on most high streets seemed negligible.

Two years on, we’re supposedly out of recession, but the picture is still grim. The aforementioned 15% average vacancy rate will soon be passed, and in some places – such archetypal “secondary towns” as Rotherham and Margate are good examples – the figure is closer to a third. There are ongoing complaints about distant retail landlords, ever rising rents and the current business rates regime – although some people in the trade say there are glimmers of hope in the government’s localism bill, whereby councils will have powers to take a much more flexible approach to the last.

In the midst of all this change, one set of statistics has always chilled me to the bone. It comes from the work of a US academic named Kenneth Stone, who famously studied what happened when Wal-Mart moved into the state of Iowa. In the following decade, the state lost more than 555 grocery stores, 298 hardware stores, 293 building suppliers, 158 women’s clothing shops, 153 shoe outlets, 116 drug stores and 111 children’s clothing stores: in total, 7,326 businesses disappeared.

Is this where Britain is going? At Nef, Elizabeth Cox has been examining the fate of our high streets for eight years; looking ahead, she sounds a little more upbeat than I expected: “We’re not America, are we? That’s the worst-case scenario, and we have to heed that warning. But I think there is more opposition to that vision in the UK, and people are trying to do something different.” That said, she agrees that the current moment is fraught with danger: “It’s about whether people see this as an opportunity to build something different, or they say, ‘We’re doomed, and we’ll leave these places closed down’. That’s the fork in the road at which we’ve arrived.”

So what will the high street look like in, say, 2030?

“It’s going to be full of services, and social aspects,” says Hopkinson. “It’ll be full of hairdressers, tanning salons, cafes and restaurants. There might be doctors and dentists there. And it’ll become very leisure-focused. If there’s an area where people like the architecture, and they can socialise, and not just shop, that’s what will happen. You’ll get a place where people will go for community.”

That, I suggest, sounds rather optimistic. What of the more blighted areas of Britain, where there simply isn’t the money to sustain that kind of vision?

“That’s where you’ll get the analogy of Shitsville, Tennessee,” he says. “If you haven’t got nice buildings, or any events, or any reason to go there unless you live or work there, you’ve got a problem.”

Welcome, then, to one very depressing vision of the future. Lattes, book festivals, and high-end casualwear if you’re lucky; pound shops, Ladbrokes and boarded-up businesses if you’re not. If 21st-century Britain often feels like two countries, we may not have seen the half of it.

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Taken from The Guardian, 22/01, John Harris

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Retail figures or January show that British shoppers splashed out with sales volumes increasing to provide the strongest increase since the Royal Wedding last April.

It’s good news or retailers, but as Kate said on Sky, we can’t be complacent.

Much of the boost stems from discounting so consumers are more likely to shop because they think they are getting a good deal.

The focus needs to go back to the customer and retailers need to focus on improving their experience. When there are stories of doom and gloom associated with the high street we often put the blame on local authorities. We blame councils, parking, pavements, infrastructure but that suggests that retailers can do nothing themselves to tackle the problems they are facing.

Great customer service, combined with a positive shopping experience will ensure people leave a shop feeling happy and content, rather than frustrated and stressed.

This week Insight with Passion’s Retail Clinics began in Bradford and Hull. The feedback in Hull was that the event was useful, our advice was engaging and informative and that it was good to see that people still care about local retail trade.

On Sky this afternoon it was suggested the high street is dead, we should move on and just focus on internet retail. The high street is a relic o the past and has nothing to do with the mdoern consumer. Not true, says Kate.

A high street has to be the heart and soul o our community, we all have to work together to ensure they improve and offer some diversity combining retail and a social element.

Below is the original news article which sparked the debate on Sky.

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Retail Sales Jump In Face Of Mass Store Closures

UK retail sales rose unexpectedly in January, while other data reveals the mass closures of chain stores on the high street.

Retail sales for the first month of 2011 were up by 1.9% year-on-year, according to Office for National Statistics (ONS) figures published on Friday.

Sales volumes, excluding fuel, were up by 1.2% compared to the previous month.

In January an estimated £24.6bn was spent in the retail sector, compared to £42.1bn in December and £23.6bn in January 2011.

The surprise jump helped drag retail inflation down to its lowest level for more than two years.

Shoppers benefited from heavy discounting as retailers tried to lure in cash-strapped customers.

Richard Dodd, of the British Retail Consortium (BRC), told Sky News that the ONS figures did not represent growth in spending, but “people getting more for their money”.

He added: “The reason that’s happening is because retailers are discounting and running really big promotions.

“That has serious implications for their margins and in some cases for their viability.”

Fears for the future of the UK high street were also driven by the fact that internet outlets and supermarkets were among the biggest drivers of the increase in sales volumes.

Separate data published on the same day revealed big high street chains closed an average of 14 stores a day across Britain in 2011.

Multiple retailers like bookshops, electrical stores, home furnishings and menswear shops fell in numbers while charity shops, pound stores and credit unions bucked the trend.

According to data compiled on behalf of PwC by the Local Data Company (LDC), multiple retailers reduced their high street presence by 0.25% – a reduction of 174 shops in 2011.

Mike Jervis, PwC insolvency partner and retail specialist, said: “A common feature of the retailers in distress who we are dealing with is that they have too many locations.

“Relatively long leases were entered into in a growth phase of the economy which are no longer appropriate.

“Electricals and bookshops have suffered as these products are now increasingly bought online but retailers in this sector are typically carrying unnecessarily large property portfolios.”

In the Greater Manchester town of Altrincham, a quarter of all shops are empty.

Mark Rubin, a retail space landlord says some of his tenants are struggling to stay open.

“On a number of occasions I have listened to tenants and decided the rent should be lowered. But that’s not a situation that can continue forever. I have to explain to them that one day the landlord is going to be in trouble.”

Florist Janet Smith has been trading for 27 years but recently nearly went out of business. Her landlord reduced the rent.

UK Cities: Worst Shop Vacancy Rates

• City/ Vacancy Rate
  Nottingham 29.6
  Stoke on Trent 25.0
  Sheffield 23.3
  Newcastle upon Tyne 23.2
  Gloucester 22.3
  Bristol 22.1
  Manchester 21.8
  Glasgow 21.5
  Hull 21.4
  Ashford 21.1

Source: LDC

“It took the strain off us – the landlord knows that he would rather have us here than have to take over the property himself,” she said.

“But the real problems are with rates – they are too high and there is no negotiation when times are bad.”

Matthew Hopkinson, director of the Local Data Company, said: “In the past the closures were offset by openings but 2011 has shown a true decline in multiple retail and leisure outlets across Great Britain.

“With the move to out-of-town locations and the numbers of closures being announced currently, this decline is likely to continue into 2012 and thus lead to a rise in vacancy rates.”

Some experts believe the high street needs to rethink how it attracts trade or run the risk of “terminal decline”.

Tarlok Teji, retail analyst at Manchester Business School, said: “The majority of new space has been in shopping centres such as Westfield in London and Liverpool ONE.

“These are substantially better shopping environments than the high street often with free parking so it’s not a surprise that consumer footfall migrates away from the high street.

“Add the growth of online shopping and we then have a high street in terminal decline.”

Link

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Our ambition is to encourage all those with a vested interest in the high street and town centre, be they developers, retailers, shoppers, residents, councillors or tourists to join together and have their say about what they feel the issues are and how they can tackle them, together.

We have been talking to businesses and retailers ahead of each Clinic to encourage them to share their stories and raise their profile of the event.

Below is Mark’s story and the issues he feels he is facing as a retailer in Hull.

“An independent retailer wants parking charges cut in Hull to win back customers

Mark, from Hullaballoon with two shops in Hull  believes high parking charges in Hull City Centre and outside independent stores like his are encouraging shoppers to head to out of towns outlets with free parking and are damaging the high street.

Retailers and commuters in Beverley have already accused traffic wardens of deliberately targeting drivers. Car parking charges are set to rise by 5% in East Riding in April.

What Mark feels is that while there is free parking elsewhere shoppers will not be inclined to go to Hull or Beverley. It makes it harder for them to compete. Hullaballoon attracts a great deal of customers through its website and online presence. However, when customers come to buy from their store in Hull there are double yellow lines outside the store. It makes it harder for the store to encourage shoppers to come back as it just makes it harder for people to pop in and then pop out, particularly if they have children or a buggy they need to get out of the car.

“One of my customers parked outside and came in to buy a balloon, she was spending £20. When she went out she had a parking ticket, even though she had a blue badge”.

Mark believes there has been an imbalance in terms of regeneration in Hull, with funding directed towards shopping centres within the city, deterring shoppers from smaller streets, like his own where there are other shops.

He is calling for greater support from the local authority. While independent retailers, like himself, are trying to increase footfall and encourage people to come to Hull the council should support them as best they can.”

Kate Hardcastle, Senior Partner at Insight with Passion will be on BBC Radio Humber tomorrow morning to talk about the Retail Clinic. The programme will also hear from Mark.

Looking down across the square and along John Street and Darley Street, the store has a good vantage point to see what is happening in Bradford city centre, and Ted is worried. He and his fellow retailers, he says, are struggling.

“Every year it’s harder”, he says. The store has had to adapt to stay open. He once sold just white goods, they have had to expand their line to include furniture. He used to employ several members of staff. Now he serves customers alone.

“I’ve cut costs to a minimum”. Yet it doesn’t feel as though it is enough.

Ted’s biggest expense is his business rates. These are a local tax paid by every non-domestic and business property in England and Wales. They are calculated and collected by each local authority and help pay for local services. For The Cooker Centre, these rates represent more than a third of their outgoings. Ted has written a letter to Bradford Council asking for them to be reduced, he believes they provide too much of a drain on small city centre businesses who are struggling in a difficult financial climate.

“I have appealed for them to be reduced. Bradford is not the same town centre it was. (The business rates) need to reflect that”.

Parking is another major issue, he notes. He worries that with customers unable to park directly outside his store they will be less likely to buy big items.

He used to be able to have street furniture outside his shop, now he has been told to remove it. Bits of furniture for sale directing shoppers inside now he thinks his customers think he’s closed because there is nothing outside.

With plans for the new Westfield Shopping Centre in Bradford, Ted feels the future is uncertain, although not necessarily negative.

“At the moment there’s nothing to come to Bradford for. Perhaps it will give people a reason to come. Maybe it will take away the business that’s already here, but we don’t know”.

Ted’s is just one shop, one view of Bradford.
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IWP Partner Kate Hardcastle appears on Sky News to discuss Britain today

Kate made her second appearance on Sky News Sunrise this morning, reviewing the daily news with presenter Eamonn Holmes and film critic Mark Eccleston. Among the discussion was a subject close to Insight with Passion’s heart as retailer Peacocks entered administration as tough times hit Britain’s high streets.

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