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Sales tacks. What to do with the high street holes caused by shop closures

October 31st, 2018

This has been a torrid time for many retailers. Every week brings news of another familiar high street shop on the skids. House of Fraser, Toys R Us, Maplins, Poundworld and Gaucho have all gone bust. Many household name chains are closing stores at a rate of knots. Rumours abound of big names struggling. 

You would be forgiven for thinking that retail spending had been hit. Far from it. Retail spending continues to grow.  It grew to the end of September by 3%.

Popular opinion has it that this reflects a move to spending online. According to this view, as a result of the likes of notonthehighstreet.com, far too many familiar names are not on the high street any more. 

There is such a shift, but this is far from the whole truth. In 2017, the most recent year for which we have figures, spending continued to grow at traditional shops by a perfectly respectable 2.7%. While online sales increased at a much more racy 15.9%, in absolute terms spending increased nearly as much at traditional shops (by just over £7 billion) as through online sales (by £8.2 billion). Online spending is increasing proportionately but it is not yet directly eating into retail spending in traditional shops, so far as we can see.

So other forces are also at play here. As well as a shift between modes of spending, there are, as always, shifts in spending patterns by type. Primark, Lidl and Aldi have been gaining market share and profits. At the other end of the spectrum, Harrods, Harvey Nichols, Fortnum & Masons and Selfridges have all posted buoyant profits.

The impact seems to have been felt most in the mid-market. Marks & Spencer, in many ways a bellwether, have endured three years of falling profits. This has been reflected in stock market valuations. JD Sports for a while had a higher market valuation than Marks & Spencer (recent market movements have reversed this). 

Well this is all very interesting but what does it mean? If you work for one of the struggling retailers, job security is a worry. The bigger social impact, however, is probably the effect on Britain’s towns. Whether or not these companies go bust, many are on a programme of closing shops. Marks & Spencer, Debenhams, Homebase, Mothercare and House of Fraser are all reducing the number of outlets. The high streets have lost Woolworths and BHS in the recent past. New shops are not taking their place. Retail life is being sucked out of Britain’s towns.

The most marginal outposts are often in the most marginal towns. Marks & Spencer is closing 100 shops by 2022. So far it has announced or implemented 35, which include Andover, Basildon, Birkenhead, Bournemouth, Bridlington, Clacton, Darlington, Dover, Durham, Falkirk, Fareham, Fleetwood, Keighley, Northampton, Portsmouth, Redditch, Slough, Stockport, Stockton and Walsall.  House of Fraser is closing 31 of its 59 stores, including Birkenhead (again), Bournemouth (again), Carlisle, Doncaster, Hull, Plymouth, Swindon and Wolverhampton. Debenhams have yet to unveil their list.  It no doubt will include a similar roll call of medium-sized towns.

These are very diverse places. But they have this much in common – none of them are world centres of anything and all of them have lots of people who quietly want a slightly better life for themselves – or at least, for life not to get any worse.

The cultural damage caused to these places by these closures will be substantial.  Often these shops were mute symbols of modest and respectable aspiration in places where anything exciting usually happened elsewhere.  Those places will feel smaller, less loved and more forlorn.

This problem has been much-commented on.  If you’re not looking at what Centre For Towns, an independent think tank with Labour roots, is doing then you’re missing a big part of the jigsaw puzzle that is British politics today.

Labour, noting that places like those listed have an outsize number of marginals, have been campaigning hard on the need to do more for the country’s towns, producing slick videos about the problems that towns face.  This looks like a smart strategy for them to pursue, and a definite improvement in this regard on the much more metropolitan campaign Ed Miliband had by default fought. Expect to see them continue with this theme.  There’s a reason why Jeremy Corbyn asks Prime Minister’s Questions about bus routes.

The Chancellor of the Exchequer took a couple of eye-catching steps in the budget to address this problem, imposing a new levy based on profits made online in Britain and easing restrictions on converting shops into residential property. Neither measure looks very meaningful. The amounts raised by the levy will be chickenfeed in the context of the problems the high streets face (it’s far from clear that shop closures are being driven by the move online anyway) and it’s all very well converting shops into residential property but you have to give people a reason to live there. 

There is a substantial danger that with the loss of a social heart, many towns will become dormitories for the poor, just as many of our coastal towns already have. With local government having undergone swingeing cuts this decade, the capacity for that to be addressed locally has been sharply reduced. The omens are not good.

So the question that now needs answering is what a lot of our towns are for. Right now, the politicians seem short on answers.

Alastair Meeks


PS – If you think you know Britain well, try this quiz. I got 82.