Is this the End of the High Street?

James Penn
April 8, 2021

Five years ago, I wrote a piece for the local press about the difficulties faced by the High Street as it struggled under the impact of the internet.

British Home Stores and Austin Reed had both gone bust earlier that year – previously in existence for 88 years and 116 years respectively, proving that goodwill built up over decades was not enough to prosper in the modern world.

Wind the clock forwards and the position of the High Street is even more precarious now, with major names like Debenhams and Arcadia disappearing over the past year – in the real, as opposed to online, world. COVID-19 has dealt the retail sector a killer blow. Talk about kicking a man when he’s down.

Those stores that are left generally fall into the JAM category (Just About Managing). Venerable names like Marks & Spencer are still there, but not exactly prospering, while House of Fraser has a much-reduced footprint following its acquisition out of administration by Sports Direct.

The fact that any of them are still around, of course, is owing to the extraordinary government support – the postponement of VAT last Spring, the suspension of Business Rate payments, and the massive benefit to payrolls through the Furlough scheme.

To get a full sense of the retail genocide that has taken place since the Financial Crisis its worth revisiting those companies that have disappeared over the past thirteen years. The list focuses on the bigger names and is by no means a complete record.

So, think of the following, which have gone into administration in recent years: Woolworths, MFI and Zavvi – formerly Virgin Megastores (all 2008), C&A, Borders (2011), Comet, JJB Sports (2012), Tie Rack, Blockbuster, (2013), Phones4U (2014), Maplin, Poundworld, ToysRUs, HMV (2018), Oddbins, Karen Millen, Mothercare (2019).

COVID has seen an acceleration in this trend. Bonmarché, Arcadia, Peacocks & Jaeger, Edinburgh Woollen Mill, TM Lewin, Oasis, Brighthouse, and Laura Ashley have all gone over the past year. We’ve also seen non-retail chains go under, like Thomas Cook in 2019.

Some of the above names have survived in the virtual world, with their brands purchased by competitors. So Jaeger has been bought by M&S, Debenhams and Karen Millen by Boohoo, and Arcadia’s Topshop, Topman, and Miss Selfridge by ASOS. The three purchasers are industry survivors, two of them operating only as online stores, with no conventional retail presence.

At the same time, we have seen John Lewis massively scaling back its presence on the High Street, while the once world-famous Jenners, on Edinburgh’s Princes Street, is due to close in May 2021.

The chains that have survived the COVID battering are those that had other strings to their bows: M&S had its food side to fall back on, while Next already had a strong online presence alongside its store estate.

M&S is an interesting case study. It has made huge investments in recent years in an attempt to improve its online offering, and this is finally bearing fruit, with online sales up 75% in the half year to September – a bigger increase than seen by some of its pure online rivals. It has also bought a half share in Ocado, the online grocery delivery company.

Chains like M&S, as well as scaling up their online presence, are also repurposing their legacy estate, shutting stores where footfall is in decline and in some cases reconstructing individual stores for a different world. M&S’s famous Marble Arch store is likely to be demolished and rebuilt partly as office space.

The demise of Debenhams seems to indicate that the multi-stacked department store of old, with separate floors allocated to different merchandise, will be a thing of the past. The retail experience of ‘a day out shopping’, with families, or mothers and daughters, spending a long period browsing and buying in a ‘retail experience’ looks set to die with it, or at least change. Some High Street stores could even be restructured as residential units in future.

Corroboration for this comes from other sectors – most clearly from the delivery firms that have benefitted massively from the pandemic. Both Royal Mail Group and Fedex have said in recent months that they don’t see shopping returning to the ‘old ways’, even once ‘non-essential retail’ has reopened again on April 12th.

At the other end of the scale is Primark, which has no online presence and no plans to build one either. Once Lockdowns are over it will aim to compete on price, scale and ubiquity instead.

So, what is the future for the High Street in this strange new world? It seems probable that the government will have to permanently reduce Business Rates for physical retail units. But the High Street will likely survive in some fashion, albeit with a bigger mix of non-retail operations alongside, including office, residential, leisure and ‘community’ outlets.

Who knows? With lots of unlet space and landlords’ rents permanently lower, we may even see the re-emergence of the odd retail ‘rollout’ brand in the years ahead.