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Store closures, services moving online and retailers losing business.  What challenges do companies face on the UK high street in 2019?

Businesses in various consumer facing sectors are facing uncertain times and economic hardship.  Last week saw the department store retailer Debenhams undergoing Company Voluntary Arrangements (CVA) to close numerous stores and the travel agent Thomas Cook announced their closure.  Some commentators have declared there to be a high street ‘crisis’; but is this really the case?

Unfortunately, there are some valid reasons and statistics to support these concerns.  The first half of 2019 recorded a total of 2,868 store closures, equivalent to approximately 16 shops a day.  This figure is up by more than 6.5% from closures reported last year and is possibly one of the most severe declines the retail sector has faced in 6 years.  The consequences of this are evident.  Major chains and household names have gone into administration including Patisserie Valerie and Debenhams.  Not only have closures cost thousands of jobs, but a mark has been left on the high street to the extent that 1 in 10 shops in the UK are reportedly vacant.   

The ‘crisis’ is not merely limited to retail stores and outlets. Indeed, the restaurant industry has been experiencing significant pressure.  High profile restaurant groups and chains including Carluccio’s, Gourmet Burger Kitchen, Byron and Prezzo have all been forced to close large numbers of stores.  

One of the most publicised collapses happened to Jamie Oliver’s chain of Italian restaurants.  Upon the closure of Jamie’s Italian restaurants, Mr Oliver cited the ‘struggles of the casual dining sector’ and ‘soaring business rates’.  While the reasons Mr Oliver provides are genuine issues, a closer inspection of his business would argue differently.  Less than favourable reviews, a failure to adapt to modern consumer needs as well as an unsustainable expansion plan are possibly more plausible reasons for the closures.  Additionally, the business failed to capitalise on the boom of tech starter-ups, like Deliveroo and Uber Eats, which provide a powerful new means for businesses to connect to customers. 

Equally, the case with Thomas Cook, the 178-year old holiday operator, is both tragic and unfortunately expected.  The product and services the company provided were becoming less in demand.  Consumers seeking to travel have become more reliant on booking services directly online which, consequently, removes the need for holidaymakers and agents entirely.     

With new online businesses emerging and consumer behaviour shifting away from physical stores, the internet has created new opportunities and threats.  The added convenience and accessibility of online shopping has naturally contributed to the decreased footfall in local shopping centres.  Retailers also must contend with rising operating costs from increased minimum wages, commercial leasehold rents and business rates.

In response to this, the government has established the Future High Street Fund.  This scheme will invest over £1 billion in order to breathe new life into a large number of shortlisted towns and cities.  Local authorities will be supported with the development of projects, improving transport, converting empty retail units and other plans to make high streets worth visiting.    

While this is an interesting matter to follow, high streets and town centres are not going anywhere, and any ‘crisis’ is unlikely to change that.  The UK high street plays a crucial role in generating income for the UK economy.  The government’s high street scheme is therefore welcomed, if the result boosts infrastructure, improves the environment where retailers operate and increases consumer footfall.  Now, more than ever, businesses must remain conscientious of consumer behaviour and market trends.   

This article is for general commentary only and does not constitute legal advice.  If you would like to discuss any of the issues discussed in this article, please get in touch.

Cheyney Goulding LLP, solicitors in Guildford, Surrey