Since the last financial crash in 2008, we have been witnessing the ongoing structural changes within the retail sector and the the real impact this continues to have within town centres up and down the country. Retailers that have been closing underperforming stores is nothing new, and for many is simply a sticking plaster to a much deeper problem, and has now become critical. Making the difficult decision to close stores or request rent reductions will not by itself solve the wider issues, merely move the problem a further down the line.
It is evident that retailers, local authorities, landlords and communities need to work together to improve town centres as a destination. At Retail Inspired we know first hand how a collaborative approach can have a positive impact on the performance of a town centre, supporting retailers and their strategies and working alongside all stakeholders and businesses operating within them. In a series of blogs, we will examine the structural changes within the retail sector and the detrimental impact these changes are having on town centres – More importantly how local leaders should move forward to support the evolution of our town centres.
Prior to the financial crash in 2008, many retailers had been expanding their store portfolios, replicating their brand in adjacent towns within a few miles of each other. Many retailers delivered store opening programmes, not always considering the size, but with the requirement to be in prominent locations with the right adjacencies next to competitors. We are now seeing these larger format stores suffering the consequences of past misguided decisions in completely different retail conditions.
Instead of reviewing portfolios and under performing stores prior to the financial crash, many retailers had been renewing leases routinely for 10 years or more and with upward rent reviews. Rents have continued to grow and occupancy costs too, but sales have stagnated in recent years as consumer habits have changed. It is widely known in the industry that many of the retailers that have launched CVA’s or at risk of going into administration are backed by private equity and have deep rooted problems with debt and a history of private equity.
Many of these troubled retailers have introduced a multi channel experience, but this investment on their online presence has been to the detriment of the store customer experience – the very thing that attracts people to a brand within a town centre. Many of these high street brands have lost focus on the customer and this is further impacting on the brand loyalty. We have seen this in department store groups where staffing numbers have been reduced and driving customers elsewhere.
With our extensive experience in retail and project delivery in town centres, we are currently working with clients including Local Authorities, Shopping Centres, Businesses and BID’s to help create town centres fit for the future. In our next blog in this series we will explore Marketing/Promotional Strategies and how these are affecting town centres as a visitor destination. We will also report on retailer investment in Product and People and the opportunity this presents for the future prosperity of town centres.
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