Britain’s high streets: in decline or a state of transition?

The news surrounding the decline of high street retail and the growth of online e-commerce tends to be overwhelmingly negative. 2018 was a tough year for some of Britain’s biggest retailers including Debenhams, House of Fraser and Marks & Spencer resulting in downsizing, store closures and job-cuts. Unfortunately, 2019 is looking much the same.

There may however be a silver lining for our once buzzing high streets that could lead to the creation of much needed homes; a topic that attracts as much news coverage as the high street. One Guarantee investigates whether the high street should be viewed as declining, or in fact, in the state of transition.

What’s driving retail decline?

Primarily (but unsurprisingly) the decline of the retail sector on Britain’s high streets can be attributed to the exponential growth of online shopping and e-commerce sites such as Amazon and various high-street retailers. The online industry appears to have grown at a rate nobody could have anticipated, leaving high street retailers seemingly unprepared for the consequences.

Moreover, overheads for businesses are increasing and rental costs for high street dwellings appear to be skyrocketing. A spokesperson from British Retail Consortium informed the BBC that “retailers will pay an additional £2bn over the next three years compared to the last three years”. It could be said that the combination of increased overheads and rental costs is a driver for high street retailers moving solely to the internet.

The UK is also experiencing a substantial pay squeeze, supported through a combination of rising shop prices, poor wage growth and a fall in consumer spending. The BBC reports that “a near 15% fall in the pound since the Brexit vote has pushed inflation over 3% - way above the Bank of England's 2% target. This has made imported goods more expensive, with those costs passed on to consumers”*.

Can homes provide the solution?

The evident demand for new homes has been well documented. Analysts and campaigning bodies such as Shelter, suggest that the UK needs 300,000 new homes a year to meet demand, yet the UK rarely gets near to building 200,000**. The need for new homes across the UK does appear to provide a workable solution to the decline in high street retail stores.

As One Guarantee reported last year in its Autumn Budget review, the Government is looking to provide a solution to the demise of high street retail through their proposed ‘Future High Streets Fund’ which plans to assist councils in converting unused high street shops into residential dwellings.

The increased presence of housing is central to breathing new life into our high street by converting empty or underused spaces above shops into new homes. These homes would be ideal for young families and professionals, ultimately benefiting the high street through increased footfall to the ‘activity-based community gathering places’, the FMB commented***.

It is fair to say that new homes can provide a workable solution to the issues faced by our highstreets and reports such as the ‘High streets and town centres in 2030’ support this view †.

At One Guarantee, we provide building warranties and latent defects insurance for residential and commercial properties throughout the UK. For more information on our range of structural warranties, please get in touch by telephoning 01603 218288 or emailing us.

*www.bbc.co.uk/news/business-43240996
**www.telegraph.co.uk/property/uk/could-crisis-high-street-lead-building-homes
***www.fmb.org.uk/about-the-fmb/newsroom/time-is-right-to-revive-and-reimagine-the-high-street
† publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1010/1010.pdf