Covid leaves the high street reeling

But market towns look set to flourish

by Harry Wallop

The list of High Street names that have collapsed into administration over the last year is like a roll call of every shop I spent my teenage years in – either for pleasure or being dragged around by my mother, as she tried to persuade a sullen schoolboy and his sister to try on a new outfit for some awful family event.

Paperchase, TopShop, Debenhams, Burton, Edinburgh Woollen Mill, Muji, TM Lewin, Oasis, Warehouse, Jaeger – all gone, or swallowed up by an online upstart only interested in the brand name to flog a few more products via its website. And then there’s the relatively new chains, the ones who used to be the new kids pushing out the stuffy old women’s outfitters and homeware shops: Victoria’s Secret, J Crew, Lombok, Benson for Beds, Cath Kidston. Now on the scrapheap.

“It’s really grim. In fact, it’s far grimmer than it seems,” says Richard Hyman, a veteran retail analyst who has covered the ups and downs of the high street for more than 40 years and has never seen Britain’s shopkeepers in such turmoil. He says because of the insulation of government support, things are even worse than they look: “There has never been a time before when the government has called a timeout on the cost of occupancy, through the business rates holiday, and the cost of employing staff, through the furlough scheme.”

But that insulation – which also includes most landlords being lenient with tenants unable to pay their rents – is due to end soon. Only then will we really see the true level of carnage on the high street.

The collapse of Sir Philip Green’s Arcadia empire was the biggest of all the failures but, according to the Centre for Retail Studies, in total more than 6,500 shops have closed since the start of 2020, with more than 120,000 employees affected. That’s a vast number of jobs. It’s more than the entire British dairy, fishing and poultry industries combined.

Hyman is one of many experts who thinks that there will be more big names to collapse, especially fashion chains, department stores and furniture shops. “Without a doubt,” he says. “There will be many more casualties.”

Many of the failed businesses, in fact most, were already in a pretty dire state before Covid came along, not least Debenhams, which had spent the previous two years staggering from one emergency bail-out to another

Some of those that collapsed did so as a direct result of Covid and the resulting lockdowns. With no one dressing up for meetings, was it a huge surprise that TM Lewin folded? I frequently used to make a panicked purchase of cufflinks from the branch next door to my office – how quaint that sounds now.

But many of the failed businesses, in fact most, were already in a pretty dire state before Covid came along, not least Debenhams, which had spent the previous two years staggering from one emergency bail-out to another. Even before Covid, the supply of shops outnumbered the demand. According to the consultancy Retail Economics, back in March 2010, a year after Woolworths had collapsed, there were 286,680 retail outlets in the UK. That’s shops, not hairdressers or cafés.

In March 2020, just before the UK economy fell off a cliff, there were 306,895. That’s a seven per cent increase. In England there has been an average of six new shops opening every single day. New chains have replaced those that have closed. Home Bargains, B&M Bargains, Dunelm, Pets at Home, Wilko, Primark have all expanded massively in the last decade.

But this expansion in shop numbers and in retail floor space is mad. And not just because the retail industry has become progressively less profitable as business rates, rents and the minimum wage have increased at a faster rate than inflation. It’s mad because in the decade following the collapse of Woolies, the percentage of goods bought online climbed from under seven per cent to nineteen per cent. Since Covid struck, it has leapt up further to 30 per cent. We should have fewer shops than a decade ago, not more.

If we strip out food and drink shopping, the percentage of goods bought online is 44 per cent. How much longer before all those high street clothes shops and department stores shut for good? Well, it may be some time. Because though the short-term outlook is bleak, it’s not fatal. As Maureen Hinton, retail analyst at Global Data, says: “We do like shopping in Britain. We just don’t need as many stores. The Covid pandemic merely accelerated those retailers who were in intensive care anyway.”

And, while the collapse of Debenhams and the struggles at House of Fraser (bought out of administration by Mike Ashley) suggest the department store is as relevant a format as a Victorian fob watch, Selfridges is in pretty rude health. “In the future, it’s going to be much less about what you do, and much more about how you do it,” says Hyman. “It’s not true to say that no department store can make money.”

The surge in consumer spending during July, August and September last year when non-essential retail was allowed to open, suggests there is a huge appetite for physical shops

Good shops, he argues, will continue to flourish. Shops that make your life easier, by – in the phrase of late, great Sir Terence Conran – “choice editing”. Amazon is the opposite of choice editing. It offers everything indiscriminately. And while that can sometimes be fantastically useful, that’s not retailing; it’s wholesaling.

The surge in consumer spending during July, August and September last year when non-essential retail was allowed to open, suggests there is a huge appetite for physical shops that offer great, wellchosen products. Remarkably, according to the Booksellers’ Association, more than 50 new bookshops were opened in 2020. Yes, there are fewer bookshops than there were a decade ago, but an increasing number of people have decided they would much rather browse and buy their books from an actual shop, staffed by knowledgeable sales people, rather than from Amazon and its algorithms.

Of course, the monster Jeff Bezos created in his garage 27 years ago is not going away. And Amazon’s ability to deliver goods within 24 hours – sometimes quicker – is a serious threat to all sorts of high street shops. But what was so curious about the return of shopping that happened in the summer of 2020 was that it was concentrated mostly in coastal towns, market towns and the suburbs. The coastal towns were not a surprise – millions had decided to holiday in the UK rather than jump on airplanes. But the relative success of market towns and suburbs indicates which high streets are likely to flourish in the future. “Localisation is a big trend,” says Hinton. “I think local butchers, bakers, grocers are doing better as we are all stuck at home – and this should continue, as working from home becomes a much bigger part of how we live.”

She believes that the trend, already witnessed by estate agents, of people moving out of London is likely to continue. “Market towns with small centres, where you are not overpowered by retail, where it is easy to socialise – that’s what’s going to happen, these places are likely to grow, because the demand is there.”

Even if most of us do return to the office, many will work one or two days a week from home, most experts believe. That decline in office workers is bad news for large city centres. London’s Oxford Street will probably be fine once tourists return, but how will Birmingham or Newcastle fare? Not so well.

But high streets in mid-sized towns may be surprisingly buoyant – and not just the pubs that decide to carry on selling sourdough on the side or cafés selling bottles of wine, but old fashioned shops staffed by knowledgeable people, selling great, well chosen products. The high street will survive. It just needs to slim down.


Harry Wallop is a feature writer and broadcaster, specialising in food and drink trends, consumer technology and the state of the high street


 

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