The Future Of The High Street
Nick Lodge
Managing Director at ONSIDE | CCO at FAN NFC | ex adidas | Retail, Brand & Digital Consultant | Project Delivery
This won’t be the first report on the subject of ‘the future of the high street’ and it certainly won’t be the last. Recent reports have dealt with the concept of ‘what next for physical retail?’ or ‘how does physical retail deal with the challenge of online?' whilst these topics are urgently important, our focus here deals with a very physical element – the stores and buildings themselves.
For a few years now the issue of vacant shops across Britain’s high streets has been a concern that has been addressed in many constructive ways, this isn’t ‘new news’. However, the recent collapse of many major big box retailers such as: BHS; Debenhams and TOPSHOP / Arcadia to name a few, has worsened this problem. Couple this with the strategic downsizing of certain retail chains, to reduce operating overheads and drive profitability, along with the continued growth and consumer dependency on online shopping, significantly reduces the lifeblood of the high street. Footfall.
Retail Apocalypse
Due to the changing trends of consumer shopping habits, 2020 was always going to be a challenging year for physical retail. Nobody predicted the devastating impact that the global pandemic was to bring. COVID-19 didn’t just create a storm for retail to weather, it created damaging impact to non-essential retailers, the full extent of which we are yet to see. Thankfully, online shopping became the saving grace for retailers and consumers with sophisticated distribution networks, and next day deliveries. This would have been inconceivable in the 90’s.
In many ways the pandemic has accelerated the future marketplace. Online shopping is now something that the majority of consumers use commonly on a weekly basis, out of necessity due to the national lockdowns for both essentials and luxuries. Click & Collect and quick and easy (free) returns, reduce the need to showcase and test products in stores, even major purchases such as used cars are now being purchased online, and delivered direct to your door.
Prior to the pandemic. The reason why online shopping was becoming more and more commonplace with consumers was primarily due to three factors:
Time. A valuable asset for everyone. Why spend time shopping when you can shop from the comfort of your own home? No need to drive and park up in a city centre, or out of town retail park. No need to traipse from shop to shop. Ironically for the majority of consumers the ‘reward’ for the convenience of online shopping was time. Time to spend with family, time to spend relaxing and socialising, and time to spend at home. Something that we’ve all had to do recently - apart from the socialising part.
To counteract the challenge of online retail, brands and retailers have had to innovate and invest in their stores to make them attractive, engaging and inspiring. Consumers will have different needs when the lockdown is lifted and retail can get back to normal, but has a lot of irreversible damage already been done? Major city high streets, not just in the UK but throughout Europe and across the world, all have a common similarity – empty retail units. Not just small stores, but prominent department store sized flagships, prominently placed at the heart of a city centre high street, or regional mega-mall.
In the past when big retailers such as Littlewoods or Woolworths disappeared from the high street, their units were leased to newer and emerging retailers such as: Primark; H&M; Zara and Superdry, relatively quickly. But now that more retailers are reducing their store estate or going out of business, who will take over the lease on these units?
In 2016 BHS went into administration and as the BBC reported in August 2020, as many as 1 in 4 of their units are still vacant, that’s 43 stores across the country, still sitting dormant.
Fast forward to 2021. In the last week (Feb 21), two major losses for the high street were confirmed. Firstly, the news that the Debenhams brand and website had been purchased by Boohoo.com, meaning that Debenhams on the high street won’t continue as a going concern. We have also seen the demise of TOPSHOP and additional Arcadia fascia’s this week after the purchase by ASOS. That’s a total of 600 stores, and an eye-watering total of 14 million square foot of retail space that has become vacant on the high street
One of the most high-profile ‘exits’ in recent years has been John Lewis’s decision to close their ￡35 million Birmingham flagship within Grand Central after just 5 years of trade, citing poor footfall and profitability challenges. What now for this 250,000 sq ft retail space? Grand Central owners Hammerson have a big challenge to find a suitable retailer to take on the space like for like, it’s more likely that the unit will be split up into a number of retail units or repurposed for office space or city centre living.
When talking about the challenges on the high street, it would be remiss not to include regional mega-malls, the biggest and best of which were purpose built in the 90’s for high volume retail footfall. Once proudly fully-leased, expanding and creating new space due to demand, or allowing mezzanine expansion to increase selling space for key tenants. As recently as 2018 we saw the opening of the Westfield White City expansion, anchored by a new John Lewis, with a number of prime, large-format units, available for the right retailer – unfortunately the majority of these units are still vacant, along with many more inside the main centre itself.
A sad reality is that many prominent and iconic retail doors across the country won’t be opening up when non-essential retail returns after lockdown. TOPSHOP’s 90,000 sq ft Oxford street mega-flagship in London, as well as their regional flagships in Liverpool (60,000 sq ft), Leeds Briggate (30,000 sq ft). We’ll also see the closure of Debenhams flagship department store on Oxford street, their prominent store in Manchester and many more across the country, as well as the 240-year-old ‘Harrods of the North’ Browns of Chester - owned by Debenhams.
At present there are too many stores, too many buildings and not enough retailers or businesses to occupy the empty units.
Who Could Take Over These Units?
It’s clear that there are few retailers in a position to take over these units on a like for like basis. Retailers such as JD Sports, Sports Direct (including their Flannels fascia) and Primark are all trading well and investing in new and bigger units in prominent retail locations, fitted out with their latest retail identities. These are all retailers who could scale-up the size of their store, and take on a much bigger unit in a city that they already trade in, however what would happen to the store they vacate?
Will IKEA continue with its plan to open city centre stores in the UK? Could we see the much-heralded Amazon Go become a staple of the UK high street? Will online fitness brand Gymshark start to establish a bricks and mortar retail presence in high profile key cities? Will Boohoo or ASOS begin to open their own flagships on the high street and start to occupy these empty stores?
The simple answer is, we don’t know who will take over these stores or when. In the meantime, they will join a long list of empty retail units across the UK and retail unemployment will rocket further.
High Street Blues
In the last week (Feb 2021) it’s been reported by the British Retail Consortium that currently 14% of stores are vacant on the UK high street and 17% in shopping malls. A total of 15,747 UK shops closed in 2020, along with over 170,000 job losses, and these numbers are set to rise.
Quite simply, the heart and soul of the high street is dying, the closure of Debenhams and TOPSHOP has exacerbated the problem. When non-essential retail returns, consumers will want to shop, it’s a been a long-held truth that shopping is one of the most popular past times in the UK. However, when consumers do return, they’ll be met with a less appealing high street. It’s likely that the majority of consumer footfall will visit out of town retail parks, regional mega-malls, or factory outlet villages, with equal choice and free car parking - putting further pressure on the performance of true high street stores.
At their peak, UK high streets were once busy, prosperous and exciting places, alive with footfall, where people would shop, meet, eat, drink and socialise. The current issue on the high-street isn’t just limited to provincial towns and cities. Oxford Street in London, often cited as one of the busiest (and most expensive) shopping streets in the world, is blighted with a high number of empty high-profile retail units, with Debenhams and TOPSHOP added to this list, the issue is clear to see.
When faced with the challenge of empty retail units, landlords may look to repurpose retail units and split them up into smaller, more attainable ‘white boxes’ ready for a retailer to take lease. Many units may be taken by food & beverage or leisure businesses, larger units may be converted into office space, or hotel & residential accommodation, but the likelihood of this is diminished if the desirability of the surrounding areas isn’t appealing. Short term, empty units could be used as pop-up stores, but an effective long-term solution must be found.
Long Term Plan - Long Term Investment
In December 2020 the Government confirmed an ￡830 million high street recovery fund, providing financial support for 75 towns and cities in the UK. The plan with this fund is to help these cities regenerate and prosper. With the biggest single investments being ￡25 million to both Swindon and Sunderland. However, this funding is to support two transport infrastructure projects in the respective towns, not high street regeneration.
10 years ago, an investment sum of ￡830 million would have helped the UK’s high streets evolve and regenerate in line with the growth of online retail, now unfortunately it's too small a sum and will have little impact. The often-proposed online sales tax is much needed and a logical way of funding government grants for high street regeneration projects. Couple this with additional government funding and this would help raise annual funds and support a sustained long-term plan for the regeneration of the high street and city centres.
High Street (R)Evolution
There is a positive future for the high street and city centre retail spaces, but it will require significant time and investment to get right.
Put bluntly. There are now too many stores and buildings on the high street, it has now reached the time that simply repurposing them, will not change or help the issue. A novel solution would be to remove the buildings that are no longer needed and redefine what the high-street / city centre of the future needs to be, taking careful consideration for the following:
The removal of some buildings (streets even) in key locations in many cities, would help craft and define new a ‘heart’ of the high street or city centre for current and future generations to enjoy. This wouldn’t be an easy vision to implement and would need to be led by a ministerial task force, and the combined collaborative focus of town councils; town planners; regional and urban development agencies and developers alike.
An objective such as this wouldn’t necessarily be required in every city or high street, but there will be many that require this level of redevelopment ahead of others. Provincial towns are likely to be in greater need of regeneration, ahead of UK key cities.
A key challenge and cost to overcome, would be the use of a Compulsory Purchase Orders to acquire buildings from landlords, that would be ear-marked for demolition. In cases where buildings are listed, or of architectural interest, the first consideration should be to keep them at all costs, or maintain their fa?ades and incorporate into the overall scheme – this has been done successfully in many cities, in particular the numerous redevelopments of Regent Street in London. But for buildings that are of no historic or architectural interest, they should be considered for demolition.
Providing funding for this initiative would have to come from regional development funds and supported with funds derived from an aforementioned online sales tax or similar.
Define The High Street Of The Future
The high street of the future, first and foremost, needs to attract people and new business, where a mixed economy can thrive. It needs to be somewhere that defines and unites a city, somewhere that celebrates heritage and culture.
This type of regeneration in a city has happened many times before, but never before has it been urgently required in so many cities. In the last 2 decades, there have been good examples of where city centre regeneration has transformed how a high street or city centre is perceived and functions. Major regeneration projects such as: Liverpool One (2008); Leeds Trinity (2013); Bristol’s Cabot circus (2008); Birmingham Bull Ring (2003) and Grand Central (2015) have rejuvenated the appeal of their cities. However, in all cases at the expense of their respective high streets, resulting in a high number of vacant shops.
One development that has been successful in the regeneration and gentrification of a post-industrial area of London, is the Coal Drops Yard and Granary Square development in Kings Cross. A place where retail, food & beverage, leisure, residential and office space combine to create a desirable and attractive destination. Arguably Coal Drops Yard is ‘off pitch’ when compared to the main shopping trade zones in London, but its high level of local residents and adjacency to premium residential living areas, elevates its position. One significant factor is Coal Drops Yard’s proximity to the Kings Cross Tech Hub and the London offices of YouTube and Google’s soon to be completed ‘ground scraper’ office. Making Coal Drops Yard a development where the consumer can truly work, rest and play.
On a much smaller scale, the development and completion of the award-winning Bradford City park (2012) is a great example where an urban renewal project, and demolition of retail and leisure units can change the vibrancy of a city and boost economic fortunes, creating a social space for the entire city to enjoy.
As Britain is a wide and varied nation, each town and city will have its own needs, the extent of which will define the level of redevelopment and investment needed.
Retail Reality
Consumer shopping habits have been changing over the last decade, the imposed national lockdowns have cemented their reliance on online shopping to buy the non-essential items they need. Before the lockdown, consumers were avoiding less-desirable city centres and heading to out of town retail parks, regional shopping malls and factory outlets. The high street already had a fight on its hands to be relevant.
When non-essential retail reopens, take a walk around your high street and city centre. How’s it looking? How many newly vacant retail stores have been added to the existing ones? Is your high street desirable and aesthetically pleasing? Most importantly, Is it busy?
My view is simple. Invest in our high streets and city centres now. Create modern and appealing retail / social spaces that people enjoy visiting, for current and future generations to enjoy. A significant regeneration of Britain’s high streets should be a key part of the UK’s post-pandemic economic recovery plan, creating jobs and stimulating industry.
Thanks for taking the time to read this article, I welcome your comments and feedback.
Note. Whilst writing this article I have referenced, and fact checked statements from the below sources.
https://www.birminghammail.co.uk/whats-on/shopping/axed-john-lewis-site-totally-19567805
https://www.bbc.co.uk/news/business-53918891
https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/december2020
https://www.gov.uk/government/news/1-billion-future-high-streets-fund-expanded-to-50-more-areas#:~:text=Our%20￡1%20billion%20Future,%2C%20workplaces%2C%20infrastructure%20and%20culture.
https://www.theguardian.com/business/2020/dec/26/high-streets-england-recovery-fund
https://dailybusinessgroup.co.uk/2021/01/online-tax-in-view-following-boohoo-and-asos-deals/
https://www.bbc.co.uk/news/business-53918891
https://www.theguardian.com/business/2021/jan/25/asos-buy-topshop-topman-miss-selfridge-arcadia
https://www.bbc.co.uk/news/business-55884596
https://www.theguardian.com/society/2012/feb/19/bradford-water-feature-city-park
https://www.bdp.com/en/projects/a-e/chavasse-park/
https://www.heatherwick.com/project/coal-drops-yard/
https://gasholderslondon.co.uk/
https://www.kingscross.co.uk/granary-square
https://www.wired.co.uk/article/st-kings-cross-tech-hub
https://brc.org.uk/news/corporate-affairs/shop-vacancies-increase-as-crisis-deepens/
https://www.express.co.uk/news/uk/1128966/millions-invested-high-streets-uk-life-dying
Head of Region - Visplay
4 年Excellent article! Your point on time is very true. For me, why spend time going from store to store for essentially the same products with a different label. Retailers need to work on their USP's like JD with exclusive products, Nike and Adidas with incredible collaborations. Retailers offering the same products as their competition are stuck in a price war yet exclusive products produced at lower volumes are demanding far higher prices. It's not about the monetary value of goods, but the physical values of brands making the goods in the future. The old retail model is dead and Arcadia was the biggest casualty of this, but there are many in the wings who are ready to pounce when the time is right. Until online can give me a pint of real ale and a homemade mince pie whilst I browse at Christmas, the high street will never die!
Director at Deloitte Consulting
4 年Great article, Nick! I think you’re spot on. In addition there should be far reaching reform of the business rate structure for retail units, especially on high streets - probably combined with the online sales tax you recommend.
Commercial Leader | General Manager | Sales Director | Consultant | ex Adidas & Intersport | Sports and Leisure Industry
4 年This is really well written Nick Lodge and is something I too care about as on a local level in Taunton I see the impact of large nationals leaving and now the loss of appeal being created by empty units and wonder what will occur in the future for my town and family and friends. This was further brought to my attention while over breakfast reading in the Times News Group today that a shopping centre sold in Coventry for ￡4.9 million from a valuation of ￡37 million eight years ago. I hope that as you say all the parties Govts, Local councils (who need to drive it) and landlords come together to build out a plan for the future. I also hope in the future that some of the E-commerce brands can take back in time some of the space as part of Brand building, customer experience and job creation.