As we approach the end of summer in the UK, a rainy month has created a sombre mood, and it’s not just the overcast skies that escalate this feeling. Rainfall at 170% of the average made July the wettest month the country has experienced in years. The UK high street and retail sector was impacted directly by this weather as customers avoided stepping out. 

The Office for National Statistics (ONS) reported a 1.2% drop in goods purchased, worse than expected, as analysts predicted a 0.5% decrease.Non-food retailers faced a 1.7% decline in sales, especially supermarkets, which dropped by 2.6%. With inflation currently at an annual rate of 6.8%, the high street’s future is clouded by economic uncertainties. This week, we explore its current status and performance.

An Overview of the UK High Street

The UK high street saw its first decline in shoppers in 14 years. Reduced consumer confidence affected purchases of expensive items, especially in electronics and furniture. Approximately 48% of shoppers are spending less on shopping due to the cost of living crisis. This is true particularly for essentials like food and groceries, as most people tend to switch stores or opt for cheaper products. This trend is even more pronounced within millennials, as they anticipate their finances worsening over the next six months. 

Economic stress isn’t limited to small businesses on the high street. The recent administration of Wilko illustrates how even larger enterprises are grappling with this uncertain economic climate. While administrators review rescue bids, Wilko will have a new administration sale nationwide. Competitors such as B&M, Poundland, The Range, and Home Bargains are showing interest in submitting offers, but the outcome remains unclear.

The UK high street saw over 41,000 stores open and 79,000 stores close between 2018 and 2022, resulting in 37,700 fewer retail outlets across the UK over the five year period. This problem is clearly visible on London’s renowned Oxford Street, which boasts 42 empty shops. Westminster City Council has introduced a £10 million initiative to combat this. Vacant spaces will be offered rent-free to small business owners with 70% price reduction. 

While the economic challenges pose risks, they also present opportunities to acquire distressed businesses at potentially favourable terms. A strategic approach focused more on long term benefits will work better. This is a good time for investors to explore alternative business models, embrace e-commerce in line with physical retail, and capitalise on niche markets while adapting to the changing consumer landscape. 

Popular Scottish food chain Bross Bagels enters liquidation

Larah Bross and partner Marc Millar, owners of Bross Bagels, took a step to close down their business by filing a petition at Edinburgh Sheriff Court on 3rd August. The much loved Scottish sandwich shop chain faced substantial debts over £1.2 million owed. They primarily owe about £625,000 to the Inland Revenue. Founded in June 2017, its largest shareholder is Larah Bross with a 50% stake. 

Earlier in July, HM Revenue and Customs issued a warning letter to Bross Bagels about potential winding-up action for a debt of £574,132. Around the same time, a new business named Hot Mama Bagels was registered by Ms. Bross at Companies House. The jobs of all their employees have thus been safeguarded. 

Bross Bagels informed suppliers via email that it had entered administration at the beginning of the month, with plans to address the debt. The business expressed determination to continue trading after restructuring and securing jobs. However, the challenges faced by the hospitality and retail sector did not make this possible. Multiple branches across Edinburgh were opened since its inception, but only the original Portobello store remains now. 

Bross Bagels has a cherished reputation as a beloved Scottish brand. Its legacy serves as a strong foundation for reinvention and revival, and can be utilised well for those interested in turning around a distressed business successfully. It is strategically positioned to leverage footfall and expand its customer base. This geographical advantage enhances its potential for increased sales and visibility.

The place of phone stores on the UK High Street

A decade ago, bustling high streets and malls showcased a plethora of mobile phone shops, with the latest smartphones on display. However, these shops have seen a significant decline in recent years. Phones4U faced administration in 2014, and Currys-owned Carphone Warehouse closed standalone stores in 2020.

Startling data from the Local Data Company reveals a massive 38% reduction in high street phone shops from 2017 to 2023. Despite this shift, the notion of mobile phone shops remains relevant. A fresh wave of concept stores is surfacing, poised to challenge tech giants like Apple and Samsung.

EE, a major telecom company, is leading the way with experience-centred flagship stores across the country, focusing on home services. Similarly, Three introduced innovative ‘Lifestyle’ stores in Ireland last year. This shift raises a crucial question: Are traditional phone shops fading away?

EE’s Studio concept will expand to additional flagship stores in Cardiff, Manchester’s Trafford Centre, and Bluewater this summer. The changing phone shop scene reflects a dynamic market where traditional stores decline, tech retail grows, and online shopping changes loyalty. 

For investors interested in capitalising upon new opportunities in retail, the future of phone shops on UK’s high street includes both traditional services and new connected spaces. Shifts and emerging  trends like EE’s studio concept offer investors a chance to identify strategic investment opportunities. Adapting to the changing consumer behaviours, exploring innovative retail concepts, and leveraging the value of physical stores can position you for success in the dynamic and ever-evolving retail industry.