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High Street Vacancies Persist in COVID Era

By Peter Adams | on 3rd September 2021 | 0 Comment
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New findings from commercial property information firm CoStar Group have concluded what many already know: the high street has been unable to fill vacant floorspace over the last five years, especially since the collapse of major retailers, and especially since the COVID-19 pandemic.

 

Secular shift in spending

 

CoStar Group’s findings make grim readings for those wishing to invest in physical-only retail outfits, as 237 large stores remain vacant in 2021, lacking the enthusiasm of buyers. In 2016, CoStar estimated that some of the UK’s largest retailers, including Beales, BHS and Debenhams had a combined total of 467 in operation. As of 2021, it is reported only 79 are still in operation.

What does this suggest to us about the state of retail in the UK, and how can you capitalise on that? Consumer spending and a boom in retail sales as lockdown eased appear to suggest Brits are more than happy to splash the cash on a post-lockdown spending spree. If this is so, why are physical store-based brands so hard hit?

Structural shifts in spending patterns may be responsible, as more of us spend our cash digitally rather than in-store. This is a pattern which has been growing since the start of the new millennium, but COVID-19 may have sped up the trend, pushing more of us into the digital-only shopper bracket. As a result, retail remains a solid place to be, but you can’t just rely on the good custom of in-store visitors. It might seem very noble to try rescuing a struggling retailer and putting its floorspace to good use, but you will need to consider the state of retail, to make sure it’s not a risky endeavour.

 

Shop till you drop

 

More retail activity online plus a demand shock due to the pandemic have hit the balance sheets of retailers hard. Great giants of the high street find themselves with hefty debts which need repaying at a later date, but with a lower level of revenue with which to chip away at it.

According to the Office for National Statistics, retailers with no physical presence whatsoever have sales volumes remaining substantially above the pre-COVID trend, albeit they are now falling slowly from the lockdown peak. This suggests that it is increasingly lucrative for investors to make that leap away from physical stores and into the world of online retail alone.

Falling retailers with large floorspaces may have failed to foresee a time when window shopping was rendered more outmoded, and didn’t invest in online infrastructure. Having seen the twists and turns of the last few years, you can make a simple choice: invest in one of these fallen giants and try to revive its fortunes, or learn from its mistakes and start from scratch, if necessary, by asset stripping.

One thing is for sure: UK shoppers have retained their appetite for retail therapy. Just make sure you’re well-positioned to offer it in this new and exciting retail landscape.

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Tags: Consumer SpendingHigh StreetPhysical storesRetailVacancies

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