Gloomy stories of slow retail sales and squeezed profit margins over Christmas and New Year have been widely reported, and evidence of the consequences is visible on high streets around the country, with their empty shops and To Let boards. Internet sales are widely blamed for poor performance on the high street, and it is true that the internet has seen major growth in retail sales over recent years. The Office for National Statistics states that 21.5% of all retail sales in November 2019 were through business conducted over the internet. This compares with a figure of 15.5% in November 2015, and 10.3% in November 2011. A sluggish economy, plus high rents and business taxes have also led to retail failures, with once well-known names such as Mothercare and Debenhams among the businesses to suffer.
There are, however, signs that problems on the high street may soon reach their lowest point, leading to suggestions that now might be a good time to invest in high street retail property. The Government recently announced the first 14 high street locations which will receive a share of £1 billion from the High Streets Task Force to help improve the UK’s retail sector. These town centres will each receive up to £25 million worth of training, support and access to research so as to give small businesses a competitive edge. The scheme will be trialled initially in 20 town centre locations, before being rolled out in 101 areas across the country.
More and more local authorities now appear reluctant to give permission for out of town retail developments, fearing they may adversely affect nearby town centre shops. Two recent applications in north Cambridgeshire and Newry in Northern Ireland have been rejected for fear of the impact they would have on local high streets. Carbon-conscious consumers are also becoming more interested in “ethical shopping”, where they make a conscious choice buy locally-sourced food products, as well as trying to support local businesses rather than internet giants such as Amazon. A desire to use their car less and cut down on pollution and emissions is pushing people into shopping locally, rather than drive to an out of town retail park.
Experts in the retail property market have begun to talk up the opportunities available in the sector, suggesting that property prices have reached their lowest point and that bargains are there to be snapped up. Bruntwood, one of the UK’s biggest property investors, has recently joined with Trafford council in Manchester to buy up two local shopping malls, while US company Prologis has bought another in north London. Chris Oglesby, chief executive of Bruntwood, claimed: “The biggest single factor for these town centres….hasn’t been online shopping, it’s been the hollowing out of towns as a result of the development out of town.”
In the Queen’s Speech to the new Parliament in December, the government announced cuts to business rates in a bid to revitalise the high street, and said the March budget will call for a review of the whole business rates system. Chancellor Sajid Javid said: “We want to reinvigorate communities, ….helping people to put the heart back into the places they call home. That’s why we’re taking action to save our high streets and keep pubs, cafes and hairdressers open by slashing their business rate bills by a half.”
Doubtless there will be other retail failures in the coming months as businesses count the cost of poor Christmas sales. However, for those retailers who are able to weather the storm a brighter future may be just around the corner.
Bretherton Law have been serving people and businesses in Hertfordshire for over 50 years. If you are buying or selling business premises, looking to lease a new property, or subject to a rent review our experienced Commercial Property team will give you honest, professional advice. Contact Osman Dervish on 01727 869293, or us the contact form below.