Britain was contemptuously described as nation of shopkeepers by Napoleon.
Shops up and down the country are closing, and high streets that were bustling a generation ago are increasingly lined with boarded up stores.
The decline seems to be gathering pace. Woolworths closed in 2009. BHS vanished in 2016 while Toys R Us and Maplin have gone bust this year. Others like Debenhams and House of Fraser have reported trading difficulties.
Thousands of smaller stores have shut. Cries to save the high street, and tens of thousands of jobs have become more urgent.
What’s gone wrong?
It’s easy to point to the internet as the cause of the problem.
True, there has been growing competition from online firms that employ fewer staff and pay less for out of town premises. The giants like Amazon make it possible to buy virtually anything, and even more important get it brought to your door with the click of a mouse.
The big supermarkets have seen the potential, and are gearing up to deliver the nation’s groceries each week. Clothing has gone online, with Next and newer names such as Asos and Farfetch not only listing everything from everyday day wear to high fashion, but in some cases offering same day delivery. But although online shopping can offer convenience and often lower costs, it may not be the only reason why the high street is suffering.
The high cost of running a small business
People like to shop. Digital shopping may have some logical advantages, but it lacks the social and recreational qualities of real world shopping. The big shopping malls, Lakeside, Westfield and Birmingham’s Bull Ring are busy and full of successful shops as well as eager shoppers.
But part of the problem is that those big malls are attracting some of the most affluent shoppers.
The high street shops are faced with competition from the internet and from big shopping malls – and crippling high costs. In the autumn budget, Chancellor Phillip Hammond tried to level the playing field. His measures were an attempt to cut charges for traditional retailers and increase them for big online traders.
He spent £900m knocking a third off the business rates bill of 500,000 small retailers – those with a rateable value below £51,000.
He also launched a new £400m digital services tax to be levied on the tech giants with revenues over £500m.
But’s it’s hard to see that this will do much to halt the decline.
The business rates discount for small retailers might help a few struggling independents, but would not have saved any of the high profile retail names who shut up shop this year.
Rateable values on prominent high street sites are usually a lot higher than the £51,000 threshold. The British Retail Consortium complained that it was not enough, and that the business rates burden remains simply too high.
So does the high Street have a future?
The High Street may not be dead, but it may need to be pruned back. Too many shops chasing too few customers, growing pressure from the internet and out of town shopping mean that some shops will need to close. The Chancellor recognised this in his budget speech, and spoke of making it simpler to get planning permission for change of use, allowing redundant shops to be made into homes and community uses.
Retailing remains a key sector, but if you run a small shop, it may be time to look at your long term future. If your investment portfolio includes retailers stocks, it could be time to ensure their online operation is healthy.
At Continuum we would be pleased to look at the future with you.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate deposit accounts.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
bbc.co.uk – Budget 2018: Can Philip Hammond save the High Street? – 29th October 2018
ft.com – Markets ask who will go next on the UK high street – 1st September 2018