“Retailers need to evaluate the purpose of their physical stores”: UK high streets hit highest vacancy rate in 5 years

New research from LDC has found that nearly 12% of UK shopping locations were empty in the first half of 2019, indicating the we’ve now hit the highest number of empty outlets in the past five years across high streets, shopping centres and retail parks.

LDC’s review of more than 3,000 retail centres found that more than 25,700 outlets closed their doors. Now, 3,508 fewer sites are operating compared to a year ago.

Retail Parks saw the biggest rise, with vacancy rates up 2.3%. High streets remained more resilient with a smaller increase of 0.5%, while shopping centre vacancy was up 1.1%.

LDC found that independents performed better than multiples in H1 2019 across all classifications.

The first half of 2019 has seen no let-up on the structural challenges facing the retail property sector. Never far from the front pages, the store landscape is continuing to evolve with new tenants entering the market, while legacy brands struggle to remain relevant in the eyes of an increasingly demanding consumer base. It’s the same story; the ongoing shift to online, high rents, high business rates, rising operating costs, the falling value of the Pound and the political uncertainty over the UK’s exit from the EU are still causing mounting pressure for all in the sector,” said LDC.

“It therefore comes as no surprise to see Local Data Company figures reflecting this with rising levels of vacancy and closures across the board. What is new, however, is that beneath the surface there are signs that retailers, landlords and local authorities are starting to make the necessary changes to adapt to market conditions.”

What does this mean for brands and retailers? Michael Schirrmacher, UK managing director at digital experience platform Bloomreach, believes it is time for businesses to evaluate the purpose of their physical stores.

“This new data won’t surprise brands and retailers operating in the UK, but it does offer food for thought. With independent stores flourishing despite this tough climate, we shouldn’t explain this away as solely down to cheaper rent. There’s a reason they’re getting enough custom to expand,”  he said.

“Shoppers still head to the high street for the personal experiences they can’t get online. Brands should consider if they can do more to give their customers the tailored experiences they crave online – whether that’s through personalised homepages, remembering the customer’s interests, or displaying relevant items.

“With Britain’s retail space going through a transition, brands and retailers also need to evaluate the purpose of their physical stores. It might be that they are a delivery mechanism, or maybe they are simply part of the broader marketing mix – a physical presence to increase brand consideration,” mused Schirrmacher.

“These considerations stem from the reality that today’s fickle shoppers are causing a lot of confusion for the retail industry. Which promotional channel should they prioritise? Should they invest in new technology rather than staff to man empty stores? Is Instagram shopping set to replace websites, mobile apps or the high street?

“The answer isn’t black and white. All these channels are part of the new shopping experience. For retailers, the real challenge is to identify new ways to manage the experience and build new, strong ties with the omni-shopper. Data can help here, connecting the dots between different touchpoints and giving customers the personal experiences that drive brand loyalty and retail sales.”

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