The number of applications to develop new retail stores has fallen 9% in the past year to 6,700, from 7,360 in 2014, reveals new research by EMW, the commercial law firm.
In 2015/16, applications fell for the seventh consecutive year and are down by nearly half (44%) the number of the pre-recession peak of 11,900 in 2008/09.
EMW explains that the fall in applications for new retail developments comes as high-street retailers continue to suffer loss of market share to e-commerce companies. Brexit may also add pressure on the sector, the firm adds.
It says that, despite traditional retailers increasingly focusing on and expanding their online services, many are often still failing to compete effectively with online retailers, such as Amazon (which is expanding into grocery), Shop Direct, Argos and ASOS.
EMW notes that the recent failures of traditional retailers BHS, Austin Reed, and Morrisons’ convenience store chain, My Local, were in part caused by the continued success of online-only brands.
Aimee Barrable, Principal at EMW, comments: “With online retailers continuing to win market share, high street firms have less of an appetite to open new shops, instead opting to develop online services or squeeze extra profits from existing space by changing the shopping experience or re-purposing stores to act more as showrooms or collection points.”
“Recent high profile closures will lead to more retail space becoming available on the market. Those retailers still looking to expand their high street presence might look to acquire some of these recently vacated stores instead of applying for any new retail developments.”
“Also, it may be that many retailers wait before committing to any new shop developments until they have a clearer picture of the economy in the aftermath of the Brexit vote.”
“In shifting focus away from high street stores towards digital offerings, retailers are continuing to adapt to changing consumer habits as they move even more towards online shopping and home deliveries.”
“It seems that on-line retailers and those who are more successful at building a complementary online presence make their digital offering a major part of their business model; they see it as key to their success. As a result, more traditional “bricks and mortar” retailers are now putting even greater effort into their online presence instead of looking to expand their property portfolio.”
“Although BHS had expanded its digital presence, some commentators had criticised the investment in its e-commerce offerings for failing to focus on the content and message being delivered online.”
“Austin Reed, another casualty of the changes in the market, was said to have failed to appeal to younger shoppers and to address the fact that technology has made male shoppers more aware of the range of fashionable alternatives. Often, it’s the quality of a company’s digital offerings that matter most in remaining competitive.”