If you get the distinct impression that some of our most-loved brands are disappearing from the high street on a weekly if not daily basis, you’re not wrong. They are. About 16 shops are closing every day as retailers restructure their businesses and more consumer spending shifts online.
According to research by PwC and the Local Data Company, some 1,234 stores shut up shop on Britain's top 500 high streets in the first half of the year. That’s 111 more than over the same period last year and the highest since the survey began in 2010.
The only new openings were takeaways and health clubs. Fashion retailers have seen the highest number of casualties, followed by restaurants, estate agents and pubs.
The retail rout that started two years ago hasn’t shown any signs of abating. In fact it’s got worse, with 2,868 stores, from retail chains with more than five outlets, shutting in the six months to the end of June. However, 1,634 stores opened during that same period - marking a 4% increase on the same period last year. How long they last though is the question now.
According to PwC, fashion retail continued to be the hardest hit sector in the six months to June, with 10 stores a week closing, mainly as a result of high profile administrations and restructurings. Meanwhile, there were also net declines of 103 restaurants, 100 estate agents and 96 pubs.
Over the past couple of years we’ve seen the demise of BHS and most recently UK retail stalwart Marks & Spencer demoted from the FTSE 100 index for the first time ever.
Philip Green’s Top Shop-owning Arcadia group is in trouble, while House of Fraser, which has been pulled out of administration is still perilously positioned. Sports Direct, which bought the department store chain out of administration a year ago with a pledge to save as many stores as possible, now looks likely to end up closing as many House of Fraser stores as the previous management planned to shut.
And who can forget that staggering 99% collapse in profits at John Lewis in the first half of 2018?
The sorry scene has started to hit overseas retailers operating over here too. The Australian owner of stationery chain Smiggle, which has expanded rapidly in the UK, has a clause written into its agreement giving it the option to withdraw its financial support if it sees fit (i.e. feels it’s throwing good money after bad).
The disclosure came to light back in June after Smiggle approached some landlords about rent costs, highlighting how it is grappling with signs of weakness on the high street.
The UK unit’s annual accounts filed at Companies House stated that its Australia-listed parent, Premier Investments, had “reserved its right” to review the financial support on which its British offshoot depends.
And now today US lingerie chain Victoria’s Secret has blamed the weak pound for undermining all efforts it’s making to turnaround the loss-making brand.
Speaking at an investors conference for L Brands, Victoria’s Secret’s parent company, the group’s international head Marin Waters, describing the UK business as being profitable and “positioned for growth” three years ago, said today it’s focusing everything it’s got on just breaking even.
“That doesn’t sound like any great shakes. . . but with the UK being in the position that it is, we don’t think it’s safe to be investing heavily,” the Financial Times quotes Mr Waters as having said.
Britain may have long been a nation of shopkeepers, but today only those businesses that adapt will survive. Picking the winners is not easy, but as the likes of Joules, Hotel Chocolat and even Apple is demonstrating, giving customers exactly what they want is key.
Important information The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
What you could do next
Market volatility can feel like an investor's worst nightmare. But if you take a few simple steps to prepare, you can keep a calm head when it arrives.
Look for opportunities
Search through the thousands of investments we offer with our powerful investment finder tool.
Stay up to date with market data
Get the latest share prices, market data, news, factsheets and performance charts for FTSE companies.