Don't arrange the funeral just yet...

Matthew Shefras
Matthew Shefras | 26 Feb 2019
Don't arrange the funeral just yet...

Many will have read with interest articles declaring the imminent demise of retail; High Streets abandoned, stores empty, some predicting the end of bricks and mortar. But is this, in fact, the truth?

It is widely reported that the internet has led to the decline of the High Street. Whilst there is no doubting this is an obvious factor, it is also clear that retail is evolving.

When an industry faces a great disrupter, such as the internet was for retail , there will always be an acclimatisation period. It has been whispered in hallowed halls, and behind closed doors that the retail figures for this Christmas period were not as bad as people thought. Many major retailers reported globally positive figures albeit that High Street sales were down, and internet sales were up.

However, this points to the overriding change in the industry and the need for retailer to adopt an omni-channel sales strategy.

Business is cyclical and we are at the lower end of that cycle when it comes to retail; but we must not be reactive and succumb to short-term policies that drive our long term strategy. We must not assume that all is lost and abandon our High Streets, turning our shops into low quality residential accommodation. We must preserve our Town Centres and High Streets, protecting their urban design for the next generation of retailers . We need to allow flexibility for our High Street to evolve into new commercial products.

Planning in respect of retail streets should be relaxed so as to allow changes of use from retail to gyms, from restaurants to workspaces but not, and preventing in most locations, changes from commercial to residential. If we do allow permitted development rights on our High Streets we will see the loss of commercial space forever and when the dark days are over and retail adapts (and who knows what the retail product might look like then) we may have lost our positive permeability, our wayfinding and the attraction of our centres.

With this great disruptive force comes the harsh reality of unfortunate casualties. We may not want to admit this, but many of these casualties have been a foregone conclusion. If your business plan works off the finest margins and does not allow the resilience to adapt its offer, nor had you welcomed and invested in new technologies then unfortunately, the disruptive force will be your demise.

But let’s be truly honest with ourselves; there are many ageing giants on our High Streets who, if not prepared to evolve, then must go forever. Walking into any House of Fraser was a soulless experience and with the benefit of hundreds of thousands of square footage on High Streets up and down the country, there was surely missed opportunities to create new and exciting in-house destinations and reposition the offer, rather than treading the same path.

The retailers that survive and flourish will be the ones that accept retail has changed and that our stores must become gateways to our online presence. Customers are expecting experience and authenticity and not a “rack them and stack them” offer. Yes retail store requirements will no doubt change; and our planners and landlords must realise that sub-division and sharing of space is essential. But we must preserve many of our High Streets for the integrity and the character that they bring to our cities and towns. We must look to the long term when considering actions in respect of the High Street and find a way to offer support in the short term.

We must also address the rates issues; If our councils and government truly want to support entrepreneurism and business growth in this country then business rate hikes of 50% for some businesses is simply unattainable.

Whilst the pain is by no means over, this is not the end for retail. Many locally owned businesses are thriving and vacancy rates in urban village locations such as Dulwich, Wimbledon and Wanstead are extremely low, all supported by strong catchments and a revival of local retailing. Landlords in larger High Streets and town centres will be faced with the reality of looking at lower rents and shorter lease terms and having to embrace independents over multiples.

This does beg the question of whether our investment market and our demand for upward only rent reviews, is one of the biggest issues affecting change.

Forty Group are working with many social landlords and residential developers delivering new neighbourhoods and new regeneration schemes, throughout the country, where there is an ability to be flexible in the type of lease, the product and the form of retail. Our High Streets will need to incorporate this degree of flexibility and I would implore planners to look beyond the current regime of rigid use class grouping, if we are to implement measures to truly support our High Streets.

We can survive this; keep calm and carry on.

Tags: Retail Is Not Dead

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