One in five retail stores on the high street are predicted to close in the next five years as bricks & mortar retailers struggle to co-exist with their growing online counterparts, figures released today reveal.
New data from the Centre for Retail Research (CRR) revealed that total store numbers will fall by 22 per cent to 220,000 in 2018, causing some 316,000 job losses across the country.
A further 164 major or medium-sized companies will fall into administration over the period, causing around 140,000 redundancies as 22,600 units close their doors, while many may survive but at the cost of closing more than half their stores.
A number of well-known retailers have plunged into administration in recent times after struggling to maintain a presence in an increasingly competitive and digitally-focused market, with HMV, Jessops and Blockbuster calling in administrators.
CRR‘s Retail Futures 2018 report forecasts that the share of online retail sales will climb from 12.7 per cent to 21.5 per cent by 2018 or the end of the decade, giving UK e-tailers the highest total retail sales share in the world.
As such, retailers with a strong web presence will now need just 70 high street stores in order to create a national presence compared with 250 in the mid-2000s, CRR found.
In its report, CRR noted: “The UK is facing a crisis.
“Retailing and retailers will either make clear strategic decisions that permit online retail to coexist with other retail channels in a multichannel world allowing bricks and mortar retailers to transform themselves, or, by avoiding making these decisions, multiple retailers will disappear or be so mortally wounded that a large minority of business categories become dominated purely online retailers.
“Much comment about retailing either sees shops as doomed (most shops will close as online takes over the majority of retail sales) or believes that online will peak, making the crisis shakeout in the industry (business as usual).
“In fact neither view is accurate; radical changes need to be made by retailers, town centres and the Government to preserve what is best in retailing.”
Retailers are also being increasingly affected by rising operating costs, which have risen by 20 per cent since 2006, outstripping consumer spending which rose by 12 per cent, putting added pressure on retailers of all sizes.
However, Ross Bailey, Director of online pop-up marketplace Appear Here, said that smaller independent businesses remain “the lifeblood of any community” and present an opportunity for industry growth.
“The conventional high street is changing”, Bailey said.
“Local councils and landlords need to recognise this and that they can‘t rely on the big retailers alone to anchor their high streets.
“There are plenty of local businesses and entrepreneurs queuing up for shop space, but the way shop space is rented needs to change so that these people have an opportunity to showcase their ideas.
“If customers are going to shop on their high street, rather than online, they need to have a reason to come to the high street.
“It needs to provide an experience, where customers are entertained – one way to achieve this is to have a constantly changing, vibrant environment, with new businesses opening for short periods of time.”