High street retailers teeter on the brink

With every rent day, the threat of redundancy.

"Lady Day" might sound like a nice day at the races but traditionally it was the Feast of the Annunciation, and the first of the four traditional English quarter days. The "Lady" here being the Virgin Mary. Falling on March 25, Lady Day was even New Year’s Day up to 1752.

Every rent quarter day brings speculation that another retailer will go under, especially after the first quarter day on 1 January this year heralded the administrations of HMV, Jessops and Blockbuster. Yet there were notably fewer major administrations following the most recent rent quarter day at the end of March.

Of course, a rent day does not automatically trigger retail insolvencies. The high profile casualties we have seen since October, with the exception of fashion retailer Republic, have been retailers with a business model that has been challenged by the e-commerce market, such that the delivery method of their core products to customers has fundamentally altered. They cannot survive on the scale they operated in previously in a principally bricks and mortar operation. (Republic’s failure in February was because it was burdened by too many loss-making stores as customer’s buying habits became more budget focused, rather than being challenged by technology.)

In general, this isn’t the case of a fashion retailer buying the wrong ranges for a few seasons or failing to brighten up its stores. They face a technology competitor to their business model that is far greater than any business competitor. These challenges cannot be dodged and a rent day bill might just be the last straw, but is not the cause.

The number of stores closed by retail high street chains in Britain has soared over the past 12 months and the start of this year felt like the end of 2008 when Woolworths collapsed. According to research by the Local Data Company, there were a total of 7,337 store closures in 2012. It seems the retail world has just had another "clear out" this year.

Those are stark statistics but completely relatable when you factor in two big phenomena threatening the high street. The first is technology via the internet, the second, the significant expansion of out-of-town shopping centres, which has made it almost impossible for local high streets to compete.

The cost of parking is one reason the high street cannot compete with out of town shopping. Moreover, 30 years ago, high streets had butcher’s shops, greengrocers, off-licences, chemists and a range of clothing and fashion retailers. Retailers with financial clout have moved out to the shopping centres – and more will follow this year and next. The anchor stores are deserting the high street, as shown by the number of retail chains closing their stores there. This leaves the shops that remain in an even more difficult predicament.

Despite these challenges, high-street retailers can still prosper if they adapt. All too often in my job I see management sticking to what they know – what was once a successful formula – in the face of all the evidence telling them they need to change. Unfortunately, by the time we are called in, it’s usually too late. As individuals’ shopping habits change, retailers must too. That means multi-channel buying – not just static internet buying – but mobile shopping as well. Online does not have to be completely divorced from bricks and mortar. Shops and online can work well together. “Click and collect” has given a life line to stores such as Argos. John Lewis has excelled in using technology to get people into their shops.

Many stores have become too big and inefficient, unable to attract the footfall in relation to rent. Retailers can instead reduce the size of their stores and operate them like large vending machines. A customer can go in and put their card in a giant jukebox – where they can pick a film or return it for example. If they are late, it automatically charges their credit card. There are ways for retailers to continue to prosper with some restructuring.

Those shops that remain may benefit from the others’ decline and closure. Despite the headline cases, corporate insolvency rates remain historically low, especially when contrasted with previous recessions and periods of recovery. Low insolvency rates are good for employment, which is a key concern following the many retail administrations. In fact just under half of jobs in the major retail insolvencies survived the administration process in 2012.

However, while businesses exist in distress and corporate insolvencies remain low, the economy continues to stagnate. A healthy economy requires activity at both ends of the economic cycle – it needs business growth and expansion, as well as the recycling of capital following business failure. The high street can survive if it changes and adapts, and deals with greater challenges than the quarterly rent bill.

This story first appeared on economia

Photograph: Getty Images

This is a news story from economia.

Grant Shapps on the campaign trail. Photo: Getty
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Grant Shapps resigns over Tory youth wing bullying scandal

The minister, formerly party chairman, has resigned over allegations of bullying and blackmail made against a Tory activist. 

Grant Shapps, who was a key figure in the Tory general election campaign, has resigned following allegations about a bullying scandal among Conservative activists.

Shapps was formerly party chairman, but was demoted to international development minister after May. His formal statement is expected shortly.

The resignation follows lurid claims about bullying and blackmail among Tory activists. One, Mark Clarke, has been accused of putting pressure on a fellow activist who complained about his behaviour to withdraw the allegation. The complainant, Elliot Johnson, later killed himself.

The junior Treasury minister Robert Halfon also revealed that he had an affair with a young activist after being warned that Clarke planned to blackmail him over the relationship. Former Tory chair Sayeedi Warsi says that she was targeted by Clarke on Twitter, where he tried to portray her as an anti-semite. 

Shapps appointed Mark Clarke to run RoadTrip 2015, where young Tory activists toured key marginals on a bus before the general election. 

Today, the Guardian published an emotional interview with the parents of 21-year-old Elliot Johnson, the activist who killed himself, in which they called for Shapps to consider his position. Ray Johnson also spoke to BBC's Newsnight:


The Johnson family claimed that Shapps and co-chair Andrew Feldman had failed to act on complaints made against Clarke. Feldman says he did not hear of the bullying claims until August. 

Asked about the case at a conference in Malta, David Cameron pointedly refused to offer Shapps his full backing, saying a statement would be released. “I think it is important that on the tragic case that took place that the coroner’s inquiry is allowed to proceed properly," he added. “I feel deeply for his parents, It is an appalling loss to suffer and that is why it is so important there is a proper coroner’s inquiry. In terms of what the Conservative party should do, there should be and there is a proper inquiry that asks all the questions as people come forward. That will take place. It is a tragic loss of a talented young life and it is not something any parent should go through and I feel for them deeply.” 

Mark Clarke denies any wrongdoing.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.