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UK high streets: why decline in footfall is such a complicated issue
So far, 2018 has been a similar story to 2017 for UK high streets: profit warnings, drops in footfall, and a general sense of doom and gloom.
The latest figures state that overall high street footfall last year was down 4.6%, year on year. Major department stores like Debenhams and House of Fraser traded poorly over Christmas. Marks & Spencer continues to struggle. Next was probably the biggest winner, but that’s only because of significant growth online.
Elsewhere, chains like Carpetright and Moss Bros have issued profit warnings, and the problems have even extended to other, seemingly more resilient sectors; just last week, it was announced that Costa Coffee’s high street sales had plummeted.
So, who or what is to blame? Well, that’s where things start to get confusing.
The well-known causes: Brexit, Amazon and less disposable income
The most commonly proposed cause of struggling high streets is Brexit. Arguably, this isn’t helpful: it’s very difficult to actually prove. A close second in terms of frequency would be the growth of online sales (aka ‘Amazon’), which is far easier to prove. Next, John Lewis and Argos, among others, readily admit that their online channels are robbing sales from their stores – something they rightly see as the evolution of the retail ecosystem.
But the possible causes don’t stop there. The decrease in disposable incomes over the last few years cannot be ignored – and with inflation increasing at 3% while wages go up at 2.2%, it’s a valid point. Then there was the interest rate rise, which has increased mortgage payments for many. That, too, is making shoppers more cautious.
These are the primary reasons we are given for the high street demise – and picking the one, pivotal factor is proving difficult.
And the situation gets even more difficult when you consider the raft of other factors at play.
The lesser-discussed causes: retail parks, parking and regional discrepancies
You may or may not have noticed, but retail parks are actually doing quite well.
At the end of last year, despite all of the challenges, footfall at retail parks decreased by less than the previous year. This, experts suggest, is a sign of the continued growth of click-and-collect, but also a reminder of the importance of parking.
Parking itself isn’t discussed enough by retail experts and consultants, presumably because it isn’t a particularly exciting subject. But head to most busy towns and cities across the UK and ask the locals why they don’t use their high street as much as they used to. Parking will always be one of the most common answers.
Additionally, another factor isn’t getting enough exposure: regional discrepancies. The reason it isn’t being discussed is that it’s deeply complex: there is no clear narrative. The usual London vs the rest of the UK argument doesn’t work – some of the worst hit high streets last year were in the capital. It isn’t an urban vs rural issue either – quirky, independent, small-town high streets like Totnes and Whitstable are far more resilient than, for example, Birmingham. Business rate differences play into this too, with small businesses being forced to increase their prices – and potentially alienate customers.
All over the country there are anomalies and good news stories where you might not expect them. But this shouldn’t come as a surprise. We spend too much time discussing the UK high street in broad and unhelpful ways, because we seek a clear narrative – and a simple solution – to the problem.
Chances are, if less people are using Stoke’s high street, it isn’t just because the locals buy everything online. They’re probably also cash-strapped, tired of paying for parking, angry at the dearth of independent shops, frustrated at the lack of Wi-Fi, or they just don’t like shopping anymore. But still the headline blames Brexit or Amazon.
Every high street is different, and faces different challenges. And the sooner we accept that there is no clear, singular answer to the challenge of high street decline, the sooner we might actually be able to do something about it.
- Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for realbusiness.co.uk. Follow him on Twitter @christianxln