- Don-Alvin Adegeest |
London - The UK retail sector is in crisis, as new figures from the Centre of Retail Research (CRR) show nearly 6,000 store multiples have been shuttered in 2019 to date.
The ongoing crisis, which in 2018 saw 18,344 store closures, shows a retail industry unable to cope with high costs, low profitability, and losing sales to online shopping. According to CRR these problems are felt by most businesses operating from physical stores, in high streets or shopping malls. The low growth in consumer spending since 2015 has meant that the growth in online sales comes at the expense of the high street, as outlined below:
The high costs of running retail outlets, including rents, business rates and high labour costs is a thorn in the side of many stores and retailers.
High costs, slow growth in sales, squeezed profit margins and heavy price competition means companies struggle to stay in business let alone achieve healthy profits.
The rapid growth of online competition showed 2018 online sales accounted for around 18.4 percent of total retail merchandise sales, with much of online growth achieved at the expense of bricks-and-mortar retailers.
Lack of preparation
Low investment in stores and weak forward planning to meet the challenges in a new era of retailing has impacted profitability.
The dire results confirm the crisis, with 9,750 independent retailers going into administration, and 753 were victims of rationalisation, which resulted in a total closure of 10,503 independent stores in 2019 to date. Furthermore, the CRR stated a total of 130,148 jobs have been lost in the sector, and 16,337 units have shut their doors altogether.
“The retail crisis in jobs, businesses, stores and high streets has been coming for a long time. Retailers who sell from physical shops have found consumer spending and profitability has been hit hard,” warns the report.
“Attitudes vary about whether this crisis represents an exciting change in how we shop or a dangerous trend that will vitiate our town centres and high streets.”
Image via John Henderson, source Flickr