UK markets open in 1 hour 10 minutes

Rainy November adds to high street gloom as shopper numbers fall

Jasper Jolly
Photograph: Murdo MacLeod/The Guardian

Heavy rain heaped more pressure on UK shopkeepers in November, with high street retailers hit hardest by declining shopper numbers.

The number of visitors to high streets fell by 4.3% in November compared with the same month last year, twice the rate of decline of retail parks, which fell by 1.8%, according to new figures from Springboard, a data company.

Parts of Yorkshire, the Midlands, Lincolnshire, north-east England and the eastern fringes of Scotland were particularly affected by heavy rainfall and flooding during November, with more than twice the normal level in some places, according to the Met Office.

What’s the problem?

Physical retailers have been hit by a combination of changing habits, unseasonably warm weather, rising costs and broader economic problems. In 2018 Toys R Us, Maplin and Poundworld disappeared as a result.

In terms of habits, shoppers are switching to buying online. The likes of Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. 

At the same time, there is a move away from buying ‘stuff’ as more people live in smaller homes and rent rather than buy. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit, have coincided with economic and political uncertainty that has dampened consumer confidence.

What help do retailers need?

Retailers with a high-street presence want the government to change business rates. They also want more political certainty as the potential for a no deal Brexit means some are not only incurring additional costs for stockpiling goods but are unsure about the impact of tariffs after October 2019. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges which they say put off shoppers.

What is the government doing?

In the October 2018 budget the government announced some relief on business rates for independent shopkeepers. It has also set up a £675m ‘future high streets’ fund under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.

What is the outlook in 2019?

Some retailers could go under. Weakened by a difficult Christmas – which accounts for the entire annual profits of many retailers, and with further Brexit wobbles to come – retailers are facing a tough 2019. Another rise in the national minimum wage in April and the falling value of the pound against the dollar, which is used to buy goods in the far east, have also added to costs and hit profits.

The Springboard analyst Diane Wehrle said that while high streets always tend to suffer more from rain than other shopping destinations, many retail parks had also taken action to slow their rate of decline, including by adding more restaurants.

Overall retail footfall across the high street, shopping centres and retail parks declined by 3.4% year on year in November, said Springboard, based on data from 480 shopping locations.

Black Friday, the day on which retailers offer heavy discounts to kick off the Christmas shopping season, fell on 29 November this year, meaning it was outside of the period covered by Springboard’s figures.

Early figures suggested that the event may have offered some relief to struggling retailers, with Barclaycard reporting transaction values up 16.5% year on year from data covering about a pound in every £3 spent in the UK. Springboard’s early data suggested that Black Friday footfall increased by 3.3% year on year, although Wehrle said that may have been driven by steep discounting that could eat into retailers’ profits.

Any short-term boost from Black Friday would come against the backdrop of a structural decline in bricks-and-mortar retailers in favour of online shopping. Online sales as a proportion of all retailing increased to 19.2% in October 2019, according to the Office for National Statistics – a percentage point higher than October 2018.

At the same time, British businesses have had little let-up from Brexit uncertainty, compounded by the run-up to Thursday’s general election. Some economists have suggested that relatively strong pay growth, a driver of higher consumption, may have peaked amid gloomy forecasts for the economy.

The ONS retail figures showed that the quantity bought in retail sales increased by only 0.2% in the three months to October 2019 when compared with the previous three months, the lowest growth since April 2018.

The pressures on retailers have prompted drastic action: more than 85,000 jobs were axed over the 12 months to October, according to the British Retail Consortium.

It has also put particular scrutiny on retail property owners. The investment manager M&G on Wednesday announced that it had suspended withdrawals of money from its property portfolio fund, saying that an unusually high level of investors had asked to get their money back.

Investors have withdrawn £2.8bn from 15 major open-ended commercial property funds in the past year, according to the data firm Morningstar.