A reshaping of town centres

“The last two years have been tumultuous for retailers but the closures we’ve seen are an acceleration of what was happening before the pandemic,” says Lisa Hooker, consumer markets lead at PwC. The accounting firm recently published a report monitoring the openings and closures of large-chain highstreet operators. It concludes that terminations have fallen “very slightly” this year with closures remaining stable from 48 per day in 2020 to 47 at the end of 2021, yet it also forewarns openings are coming to a standstill as net declines increase from 9,877 in 2020 to 10,059 the following year. “The 2021 numbers encapsulate some of the ‘big’ business failures and administration's that took place in the early part of the pandemic,” says Kien Tan, senior retail advisor at PwC. The firm credits these failings to changes in “consumer behaviour”, “evolving patterns of working” and the “shift to e-commerce”, hindering both retail and service chain businesses alike. Recent data from the Office for National Statistics (ONS) holds the shift to buying online accountable for the “large majority” of highstreet closures, with online spend contributing 28.1% of all retail in the first half of 2020 - a 7.8% increase on the same period in 2019. PwC’s study substantiates ONS’ proposal, displaying that “several” fashion and department store closure chains were acquired by online operators with “no ambition” to operate physical stores. “People are changing the way they shop. The pandemic caused a real step in change and there has been a real migration towards online purchasing,” expresses Tan. He names banks as one of the most frequently terminated operators due to updated app transactions removing the need for physical sites: “It’s more convenient - you don’t have to go into a branch.” Yet cited by the Local Data Company, Wolf Ollins chief designer Chris Moody contends that in actuality, brands have “embraced” the multichannel approach, bringing together the “benefits of online and in-person retail.” Online ordering undeniably offers a high level of convenience, according to the Local Data Company, but retailers with an established physical presence can make the most of this if they incorporate physical and digital operations. Generally centrally located, physical stores can function as distribution hubs, strengthening online orders with click-and-collect services and delivery fulfilment. Businesses that own physical sites across the country place them on a relatively “even footing” with online-only retailers, who would need to source more warehouses to achieve the same potential of locality and speed of delivery. Yet the Centre for Retail Research alludes to an alternative proposition for the net increase in store closures; the rise of a ‘new consumer’ - a consumer with altered behaviours that began “shopping around” for value as opposed to persisting with established supermarkets. “In the early stage of the pandemic consumers rediscovered their local highstreet - since people were stuck at home, they began to frequent their local shops,” says Tan. The retail advisor correspondingly offers “locality” as an explanation for the surge in net declines, “since retail parks and standalone operators” have “broad appeal”. According to PwC, one of its biggest findings is the performance of retail parks and standalone sites. The firm discloses they have remained “relatively insulated” from closures and performed “significantly better” than high streets and shopping centres. “That's where consumers are going because it's more convenient for them,” says Tan. “The ‘increase in driving post-pandemic’, ‘parking availability’, and the ‘surge in remote working’ are seeing consumers favour retail parks over highstreet stores.” PwC strengthens this suggestion, displaying that out of 7000 store openings in 2021, the majority consist of “re-siting existing stores”. However, these statistics “do not point to ‘the death of the highstreet’,” urges Lucy Stainton, commercial director at the Local Data Company. “And they should not be viewed in isolation. They in fact reflect the constant evolution of physical retail.” Moody affirms Stainton’s proposal, assuring “there is a marked desire to return to shopping locations to browse, eat and socialise - experiences that cannot be replicated online.” Moody explains it may be more appropriate to propose the net level of closures represent a “last shakeout” of some of the heritage brands and “natural churn” in highstreet operating. “Many of the CVAs and administrations that took place in the midst of the pandemic have now been captured,” Hooker observes. Namely “department stores”, “fashion retailers” and “hospitality operators” are consequently leaving gaps in city and shopping centre locations. “There is a pressing need to ‘radically’ reshape and even repurpose towns and city centres plagued by these empty units and shopfronts. To regain lost footfall, high streets must understand why retail parks are so attractive to consumers or look for ways to better serve local needs.” So what businesses can we expect to replace terminated sites? “Independent stores and entrepreneurs,” says Hooker. Tan accredits the pandemic to “helping ideas flourish” and suggests these brands of businesses stand a “better chance” at succeeding in a highstreet setting due to their “ability to make it fun, meet local needs and identify new ones.” Hooker maintains it is now about “‘encouraging’ these categories to take this opportunity to grow into the gaps that are emerging.” According to the Local Data Company, a net total of 804 locally run convenience stores, barbers, bakers, cafes and fast-food joints opened in the beginning of 2021, driving the first rise in independent operator figures in four years. “It needs to be something that makes people want to visit the highstreet. Something they won’t get anywhere else.” Tan correspondingly alludes to the appetite for a variety of independent operators in town centres, not solely retail - “customers want to get entertained and eat out,” naming cake shops among “one of the fastest” growing categories we are seeing. But what is it about independent operators that are so appealing? “The great thing about independent operators and entrepreneurs is they are often local and better know what local people want.” Offering a more personal service, bespoke décor and unique atmosphere, are some of the chief distinctions between chain and independent operators. Finance business Liberis strengthens the publications proposal, displaying eight out of ten British consumers say they prefer independent businesses over larger stores with “personal touch,” feeling of value” and an “overall better customer service,” as motivators driving this attraction - yet, if there has been a longstanding appetite for independent operators, why are they now starting to reclaim high street environments? “Businesses can start to afford the cheaper rents and landlords are interested in independent operators because they bring people into the highstreet,” says Tan. According to the Centre for Retail Research, rents paid by shops have been ‘declining’ as stores close and new occupants become difficult to find. “Historically, many town centre sites were off limits to independents and entrepreneurs because landlords like ‘big’ retailers with ‘strong’ covenants,” - however now the large-chain operators are starting to retreat, there is “less competition” and landlords are “more open” to contracting these types of firms. As large-chain operators begin to move away from high street settings, they are paving the way for new operators to take their place. Advancement in online shopping, new consumer behaviours and the preference of independent firms over more established ones are encouraging these chains to either cease sites entirely or relocate elsewhere. “The shape of our high streets and shopping centres are going to change,” states Tan. “It's not necessarily a bad thing. It just means they're going to look different.” With town centres becoming more accessible to independent operators and entrepreneurs, there's now space for them to grow in this environment. “The combination of government support and the fact that chain operators are withdrawing from more traditional high street settings and shopping centres” is increasing the ability for these firms to successfully operate, says Tan. “Obviously, not every single shopping centre or high street will succeed. But it's actually an opportunity - it's within their gift to change the way they operate” - and those that do, “will succeed.”

A reshaping of town centres

As businesses are forced to change with adapting consumer behaviours, many highstreet large-chain operators have either ceased entirely or re-sited locations. With vacant sites becoming more accessible, what class of businesses can we expect to fill them?

Check out our free weekly podcast

Read Next

Today’s news in brief-16/4/24

Primark lowers prices on hundreds of kidswear items

Sosandar FY revenues rise 9% to £46.3m

Today’s news in brief-15/4/24

Trudon candlemaker to open debut store in Covent Garden

Today’s news in brief-16/4/24

Primark lowers prices on hundreds of kidswear items

Sosandar FY revenues rise 9% to £46.3m

Today’s news in brief-15/4/24

Trudon candlemaker to open debut store in Covent Garden

Today’s news in brief-16/4/24

Primark lowers prices on hundreds of kidswear items

Bath and Body Works opens first London store in Westfield

Marks Electrical FY sales hit record £114.3m

Superdry seeks rent reductions as part of restructuring plan

B&M expects profits to hit top end as revenues jump 10%

Check out our free weekly podcast

Read Next

Today’s news in brief-16/4/24

Primark lowers prices on hundreds of kidswear items

Sosandar FY revenues rise 9% to £46.3m

Today’s news in brief-15/4/24

Trudon candlemaker to open debut store in Covent Garden

Related Articles

Today’s news in brief-16/4/24

Primark lowers prices on hundreds of kidswear items

Bath and Body Works opens first London store in Westfield

Marks Electrical FY sales hit record £114.3m

Superdry seeks rent reductions as part of restructuring plan

B&M expects profits to hit top end as revenues jump 10%