Declining retail sales in Britain have dragged the yearly average down to the lowest level in more than 20 years, according to report from the British Retail Consortium (BRC). The decline has deepened this summer — which failed to match the 2018 heatwave —with vacancy rates hitting a four-year high and sluggish footfall underlining a torrid season for retailers. Empty store fronts climbed to their highest level since January 2015 last month, following a turbulent 12 months during which some of Britain’s most iconic retailers permanently closed their shops and carried out drastic staff cuts.
In recent months, a number of high street giants including department store group Debenhams, womenswear retailer LK Bennett and restaurant chain Jamie’s Italian have collapsed, while dozens of other brands including Sir Philip Green’s fashion empire pressed ahead with dramatic cost cutting plans. According to data from the BRC and Springboard, national town centre vacancy rates hit 10.3 per cent last month, a slight increase from the last quarterly rate of 10.2 per cent.
The latest sign of distress for bricks-and-mortar firms was also shown by the steepest decline in July footfall since 2012, as the number of shoppers on high streets and in shopping centres tumbled from the previous year. BRC chief executive Helen Dickenson urged the government to relieve some of the pressure bearing down on the high street by bringing in an immediate freeze on business rates.
Rising competition from online rivals, higher fixed costs and tough comparatives from 2018 have all put the pressure on physical retailers this summer, with many outlets subsequently turning to aggressive discounting to draw in moreik shoppers. Landlords have also been dented by the industry’s downturn, with retail property groups suffering a fall in rental income following a rise in vacancies. Springboard’s marketing and insights director, Diane Wehrle, said, “July was a much more challenging month for high streets and shopping centres than for out-of-town destination.”
She added: “Some of the minus 2.7 per cent drops in high street footfall was a consequence of a strong comparable of 0.3 per cent last year when we had a continuous period of hot sunny weather, but for shopping centres — with the minus 3.1 per cent drop being as almost as severe as the minus 3.4 per cent drop in footfall last year — the weather clearly has less impact on footfall than the challenges created by the ongoing structural change in retailing.” Previous BRC figures revealed last month was the worst July for sales growth since records began in 1995.
There was further grim news for high street with online-only fashion retailer Boohoo buying the Internet arm of the struggling fashion brand Karen Millen, which will result in the closure of 32 shops and puts 1,100 jobs at risk. Head of retail and wholesale at (accounting firm) BDO, Sophie Michael, said: “It is crucial the new prime minister delivers on his pledge to implement measures that will help save the high street and provide some much-needed reassurance to retailers and the hundreds of thousands of people they employ.”
Meanwhile the online white goods retailer, AO World, has launched a mobile phone business that it claims will undercut its rivals on price, heaping further pressure on them. AO World struck a deal to buy online-only Mobile Phones Direct last November for £38.1 million as part of its plan to expand beyond fridges and washing machines.
Nine months later, the company has launched a website which sells a Samsung A10 handset for £24 a month or an iPhone X for £55 a month with contracts on O2, Vodaphone and EE. Its previous phone offer was limited to just handsets, without data packages or other services. The founder and chief executive of AO World, John Roberts, said: “We’ve built AO Mobile for today’s world.” Adding: “Customers tell us that they find buying mobile and connectivity complicated, we’re making it easy to choose what’s best for them with easy-to-understand pricing and fantastic service.”
Roberts said that the company could offer cheaper product “because AO Mobile customers don’t have to pay for hundreds of high street stores with thousands of sales staff.” The company, founded in 2000, was listed at 285p in 2014, valuing it at £1 billion, but its shares have had a rocky ride since then due to its lacklustre German and Dutch business. (The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
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