High street retailers continue to feel the pinch
The UK’s high streets suffered an historically bad year in 2018 – and 2019 is in danger of falling into the same slump.
Many well-known businesses continue to cite ongoing Brexit uncertainty, online shopping and rising business rates among the challenges they face.
This week Boots has become the latest major retailer to announce it is facing tough times.
Its owner, US-based Walgreens Boots Alliance, has warned over UK store closures as it looks to slash costs amid the “most difficult” quarter in the group’s history.
It said it has taken “decisive steps” in the UK to cut costs, including reviewing its near-2,500 Boots retail stores, which include many across the West Midlands.
“We currently do not have a major programme envisaged, but as you’d expect, we always review underperforming stores and seek out opportunities for consolidation,” it said.
Professor Heiner Evanschitzky, co-director of Aston Centre for Retail Insights at Aston University, said: “High Streets struggle because of a fundamental change in consumers’ shopping behaviour. The move to online is increasing, convenience is getting more important, and traditional retail destinations are increasingly perceived as not very inspiring places to shop.
“Retailers like Boots are victims to that trend. They sit in rather expensive locations and are faced with online competition for over-the-counter prescription free products in particular.
“Pharmacies have a golden opportunity to become more successful because consumers generally have high levels of trust in their pharmacy, and services around pharmaceutical – or more broadly beauty/health products – are important and very much valued by consumers.
“Therefore, retailers like Boots should focus on what online cannot easily copy, that is, customer services and offering customised solutions for their health concerns.”
Debenhams is another example of a well-known retailer struggling. It has issued a string of profit warnings and is trying to renegotiate its debts and restructure the business.
It is also reportedly trying to accelerate plans to close stores and is expected to close around 20 outlets this year.
It comes after a year of crisis for high streets in 2018 which saw Poundworld, Toys R Us and Maplin all going bust and disappearing altogether.
The outlook for the rest of the year remains challenging for shops and restaurants as consumers rein in their spending, switch to buying on the internet and prioritise leisure and holidays over shopping
At the same time, business rates have soared in some locations and the minimum wage rates paid to many shop workers have gone up by more than the rate of inflation.
They have also been hit by a fall in the pound following the Brexit vote – which has increased the cost of imported goods.