High streets across the UK are preparing for a wave of store closures, as an onslaught of retail company voluntary arrangements (CVAs) looms.
Last week Debenhams revealed plans for its CVA, which would result in 22 store closures in early 2020. Arcadia Group, Monsoon Accessorize and Ann Summers are all expected to launch their own store closure programmes in the coming weeks.
Data compiled for Drapers by Local Data Company (LDC) found that the south-east of England is at highest risk of multiple store closures: out of the proposed list of Debenhams closures, 12 are based in the region.
Southsea in Portsmouth is facing the highest risk as nine retail stores could close within a 3km radius of the Debenhams branch, LDC found.
Six retailers are at risk of closing within a 3km radius of the Debenhams stores in Eastbourne, and Canterbury in Kent.
Lucy Stainton, head of retail and strategic partnerships at LDC, said the south-east was most at risk, as competition there was toughest: “Competition for footfall and spend in this region is fierce – greater cannibalisation is coupled with higher occupancy costs.
“[However], the closure of more legacy operators is creating space for new brands to open and flourish as well as providing a stark warning to those who still remain that they must continuously challenge their offering.”
Stephen Springham, head of retail research at property consultancy Knight Frank, agreed that a tightening of the market was needed: “The most fundamental reasons for these CVAs is that the market is oversupplied. We need a contraction, but it’s not going to happen overnight. I would hope that over the next 10 or 20 years we would have at least 10%-20% less [retail] floor space.”
Despite the short-term effects on footfall, Peel Hunt analyst John Stevenson said the onslaught of CVAs will help return retail rents to a sustainable level: “The future of the high street is reliant on how long it takes to rebase rent levels, whether that’s through CVAs or lease expiry. CVAs will accelerate that and, ultimately, the high street won’t rebalance until rents come down. Only then will you see local businesses come back onto the high street.”
Retail veteran and high street adviser John Timpson agreed the loss of multiples on the high street would allow independents to flourish: “My long-term prediction is that life is going to be very good for independent retailers because they are the ones that will reinvent the towns. The big multiples are threatened by the internet, whereas independents drive footfall.”
He added that local councils must work with retailers with innovative portfolio propositions for the high street as quickly as possible.
“You need to have a hard look at the planning laws to make sure that planning decisions are easy, quick and make sense.
“I can see lots of people getting in the way of an imaginative scenario – but speed is the most crucial factor now.”
Retail stalwart Bill Grimsey said high streets need to be revived as community hubs in order to thrive: “Retailing in high streets is dead and now high streets and town centres must be centred as community hubs. We need to make them places to gather and the leaders that should be driving that are local authorities.
“There is a corporate social responsibility to help manage that transition when you close a store in a community. If you dig for oil, when you leave you have to restore the environment to how you found it. There will be different answers for every town up and down the country.”