HIGH STREET CRASH -

IS THERE A FUTURE? 

15 August 2018

 

It feels like not a week goes by when the High Street does not take another turn; Mike Ashley buying House of Fraser - and not only using the new space to expand Sports Direct, but also his luxury brand Flannels. He will now be in discussions with landlords about new rent deals, as in many cases the store was an important anchor tenant.

These potential closures of large stores and the announcement of other retailers rationalising their property portfolio, like Homebase, will have a dramatic effect in terms of loss of jobs, the knock-on effect to other retailers nearby, the effect on suppliers, and the overall effect to the high street.

For the landlord, this does not look good as they speculate the future of the High Street, as well at out of town centres. For the landlord, there is the outlook of loss of rent, the difficulty in re letting and, in the case of the large stores, is there still a large space operator who can occupy all of the space, or will the solution be to split the space and possibly magnifying the problem?

And then there is the concern over the increasing use of the use of company voluntary agreements by both restaurateurs and retailers to get out of lease agreements and reduce rents. The demise of House of Fraser is being put down to the landlords standing up the use of CVAs , but perhaps we should be looking at why retailers feel it is necessary to take this action!

The High Street is experiencing a complete change that is being brought upon by an evolving consumer market that was highlighted by the economic crash in late 2008 and has not gone back to traditional trends since. Tenants have experienced increased costs and this has not just been property costs , but changes to how they run their businesses such as wages, pensions etc. All very valid costs, but they have affected the retailer and his bottom line, with affordability implications.

As we have already seen in the press, the online retailers continue to prosper, and are in a position to offer the customer considerable price savings and convenience, especially as they have established, and are improving, delivery.

So if the High Street has changed and is not going to re-set to a format we know, is there a future?

I believe there is and possibly about time. The High Street needs to re-invent itself . This may not be as easy as it would be for a centre where there is a single landlord, so what is needed is a mind shift that all of their stakeholders in the High Street can understand and promote.

There has to be a reason to go in to the High Street and it may not be just to shop but browse and buy later; to take advantage of a mix of services; go to new and exciting restaurants/bars/coffee shops and leisure uses. And to realise that not all High Streets need to be the same - something you often hear as a criticism from people going shopping.

Without doubt what we might see is a contraction of the principle retail core and a decline in retailing in the secondary and tertiary locations. This space might go to a mix of these other uses and even residential. This will put a strain on planning, such as change of use, unless councils reconsider how they handle planning applications .

The High Street should not be seen as finished, but evolving, and change in itself can cause fear. I would say embrace change and landlords and retailers need to respond to the way we live, use our leisure time and shop - and that can all be done in the town centre.

 

COMING SOON: Our View on High Street Retail research paper, Summer 2018 - click here to subscribe. 

 

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