Internet Crushes High Street, But Brick and Mortar Aren't Beaten Yet - CPA

Internet Crushes High Street, But Brick and Mortar Aren’t Beaten Yet

12th April 2018.

The UK’s high streets suffered more store closures in 2017 than in any year since 2010, as fashion retailers, shoe shops, travel agents and estate agents were driven out of business by the rise of the internet.

As more people buy iPhones, IPads and laptops, more are looking towards these devices to solve day-to-day tasks that they once ventured outside for. Banking is now online, theatre tickets are reserved on the web, along with travel agencies and theatre box offices. It has made our lives easier, but it has also reduced once necessary roles into ones that are now obsolete. Clothing shops are now in trouble as more fashion is bought online, as well as banks and travel agents who now pose little help to the digital customer.

According to new data compiled by the Local Data Company (LDC), 1700 chain shops closed their doors in 2017, which is an overage of 16 stores a day. As part of an analysis of the UK’s top 500 towns, LPC found that while coffee shops, bookshop, cafes, and ice cream parlours were going up in number, other businesses from clothing shops to pubs, were falling in number at a concerning pace. Fashion and footwear stores were the hardest hit in 2017, with spending behaviour affected by the high inflation and the dramatic fall in the value of the pound since the 2016 Brexit vote.

While there is no doubt the high street is in trouble, its fate is not yet sealed. While consumers are preferring the ready convenience of online platforms, brick and mortar stores can fight fire with fire. While traditional concepts were once enough to catch a customer’s imagination, retailers now need to offer up new technology and eye-catching visual merchandising to catch the customer’s attention. The easiest way to achieve this to generate an online presence, building advertising campaigns to generate interst. Our debt recovery services at the Credit Protection Association help our business members achieve this, recovering old debt that can finance new expansion projects and new ventures.

It isn’t just the internet that’s causing trouble for retailers, however, with staff and business rates rising, and a tightened grip on spending, all are creating a rather unstable trading environment.

Lisa Hooker, consumer markets leader at PwC, said: “2017 was tough for the British retail industry, particularly the second half of the year. We saw volatility from month to month and across different sectors as wage growth failed to keep up with inflation, forcing many shoppers to think more carefully about their spending habits.”

The problems have continued into the first quarter of 2018, which PwC said was the toughest first quarter since the last recession in 2009-10. Big names including Toys R Us and the Bargain Booze owner Conviviality have fallen into administration, while New Look is closing dozens of stores in a big restructuring. Mothercare, Carpetright and Homebase are all considering closing dozens of stores.

The high street expert Mary Portas said the government could help with business rates, but retailers needed to adapt or die. “We are going through a massive transition. Businesses that are going down are sometimes too big to be responsive and sometimes they are just mediocre and they haven’t invested in what consumers want. It is about being innovative and creative.”

The British high street is currently a tough location for trade, even the most influential businesses aren’t exempt from insolvency. Businesses on the high street, therefore, have to make the necessary precautions, ensuring their cash flow is strong, and not infested with late payers. The climate is also mercilessly competitive, so business should consider new technology and renovations to encourage consumers to their door over their rivals.

At the Credit Protection Association, our debt recovery services free up cash flow, chasing down late payers and recovering old debt our members had all but forgotten. This new financial freedom not only pulls our members back from the brink of insolvency but also allows them to embrace new equipment and ventures; all of which will improve their business and its future prospects.

If you think you are in danger of becoming another insolvency statistic, don’t despair. If you are struggling with your cash flow and concerned for your business’ prospects, come to CPA first before you consider liquidation. We will recover bad debt, chase late payers, and put you back in the driving seat!