1015 Monday 10 December 2018

Analytical firm, Springboard, have published a report this morning claiming that physical shopping on the UK High St. has fallen to its lowest levels since the 2008 recession, but should we really be surprised? The report found that footfall in shopping centres and High Streets fell by 3.2% and that it expected a fall of 4.2% in the run up to Christmas in December. Diane Wehrle of Springboard was quoted as saying "These figures are the worst footfall figures that Springboard has recorded since the recession and we're not actually in recession". The analytics firm also cited Black Friday as a failure for the High St. in comparison to their online rivals.

2018 has seen many household retail names collapse due to declining sales and poor performance including Maplins and Toys ‘R’ Us, whilst others like American Golf and House of Fraser were purchased in order to keep the companies afloat, albeit with closures and job losses. But sales aren’t slowing down, the consumer just has more options than ever before, and with much of the blame being placed on the growing strength of online retailers, the real question that people should be asking is why didn’t the UK High St. adjust to keep themselves competitive?

Last week Sports Direct chairman, Mike Ashley, appeared before the Communities Select Committee to discuss the fate of the UK retail sector. In a meeting that had more comical headlines than solid propositions come out of it, Mr Ashley did however suggest more free parking plus click and collect systems to entice people back to the High St., but much revolved around the idea of a special tax for online retailers. This was also brought up in the last budget from Chancellor Philip Hammond, but as he alluded to, this is something that the government has been looking at for some time and still has no solution to. Much of the online retail industry comes from international firms, such as Amazon, therefore altering the specific tax rates would require the government to renegotiate international tax treaties, a feat that the chancellor himself admits will not be easy and even temporary tax measures may not be able to come into play until 2020.

Brexit has also been a factor for UK retailers in the past two years following the referendum, with the uncertainty surrounding it causing many firms to analyse and re-analyse their positions. Some firms have discussed shifting some of their operations from the UK to mainland Europe, others have been stockpiling goods to prevent a pause in service, while others have given a far bleaker view on their outlook. One of the latest firms to have their say on Brexit was Primark, owned by British Associated Foods, who last week claimed that British consumer confidence is low in the run up to any form of Brexit deal and too saw a decline in sales. The firm are however still set on opening more the 1 million sq ft of new stores next year including a 160,000 sq ft branch in Birmingham.

Be it online sellers, Brexit or any other factor, these were not unforeseeable challenges for UK retailers and perhaps instead of looking to blame others and seek unprecedented aid, firms that have seen a drop in sales and performance should have looked to their board and business practices to see how they could alter the way they operate to place them in a stronger position to handle headwinds.

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