The Grimsey Review, released today, predicts that twenty thousand stores will face closure over the next 12 months. Five or six big names are expected to form part of this 12 month forecast, which, if they come to pass, will further rock the fragile state of the High Street.
According to the report, fashion apparel stores and small electrical shops will suffer the most. Compiled by Company Watch and consisting of more than 400,000 companies, the data will highlight how “unfair” business lending rates, expensive local car parking and the boom in online shopping have weakened the UK’s independent retail sector.
The former Wickes boss Review has put forward 31 recommendations that propose to tackle the decline, among which is a call for councils to use reserves to fund small businesses and introduce more free car parking.
Commenting on the report, Philip Duffy, Partner at Duff & Phelps, a leading independent financial advisory and investment banking firm, says: “The findings by the Grimsey Review are hardly groundbreaking, considering the continued distress the High Street has endured these past years. The greater impact on the High Street, beyond the financial challenges, is the move towards online rather than traditional offline shopping. Latest figures from the IMRG Capgemini e-Retail Sales Index show that online-only retailer sales rose by 13 per cent year-on-year compared with their multichannel competitors.
“Retailers who have both a physical and online presence recorded just 6 per cent growth, the lowest reported by the Index for this group since IMRG and Capgemini started tracking the figures in 2010. In addition, the latest ONS statistics on Internet access in the UK, show that in 2013, 72% of all adults bought goods or services online, up from 53% in 2008. This trend in the changing habits of today’s consumer is a significant contributor to the struggling High Street.
“As much as we applaud the recommendations of the Review to encourage retailers to return to the High Street, there is still the need to look at what that actually means to today’s consumer. Technology, as well as the recession, has changed the way we shop and without embracing that fact, no measure, long or short term, will get the High Street back on track.
“However, having a user-friendly website, or high traffic volume to that site, does not necessarily mean that a retailer will be able to stave off economic hardship. Some of the most successful and beloved names in retail, including John Lewis, Waitrose, Sainsbury’s, all have one aspect in common: they instil consumer confidence.”
“Consumer confidence establishes itself over time; a commodity struggling retailers often don’t have. However, a combination of High Street and strong online presence, monitoring of consumer spending trends, along with an efficient corporate business model are certainly three ways that retailers can ensure a company is robustly positioned for 2013 and beyond.”