Recent research warns a further cut off of 175,000 jobs from struggling UK high streets this year and the value of retail property will slump as the boom in online shopping and rise of giants such as Amazon continue to take their toll. According to findings published on an annual report from the real estate adviser Altus Group, over 23,000 shops are forecast to close in 2019. Figures suggest this year will be even worse than 2018, when a series of high-profile company failures and store-closure programmes claimed nearly 20,000 stores and 150,000 jobs.
The seismic shift in shopping habits in the UK prompts authors to predict that the overall value of retail property will tumble by 15.9 per cent this year as shoppers are lured away from the high street by online alternatives. Many high streets are struggling with fewer customers and the shift to online shopping. The most recent official figures available showed the number of shops, pubs, and restaurants lying empty soared in the first six months of 2018. Last year was a difficult year for the retail sector, with a long list of high street failures, including House of Fraser, Evans Cycles, Maplin and Poundworld, while other chains including Mothercare and Carpetright, together closed hundreds of under-performing stores. Retailers planning to close stores this year include Marks & Spencers and Debenhams.
Altus Group's annual commercial real estate (CRE) innovation report found that 62 per cent of major UK property owners and investors claim that Amazon and other online players have disrupted the retail property market. A further 78 per cent said the trend towards “experiential” retailing was affecting their investment decisions as customers seek out experience-led shopping. Overall, it warned that “2019 is set to be another tough year for Britain's high streets as businesses continue to grapple with rising costs, subdued consumer confidence and an increase spend online.”
Separately, the Royal Institution for Chartered Surveyors has taken the unusual step of instructing valuers to be “aware of the potential for significant changes in value” in retail properties, effectively to a wake-up call for listed landlords and owners of major shopping centres such as Intu Properties and Hammerson. Altus Group Managing Director, Guillaume Fiastre said, “Retail of the future will use bricks-and-mortar spaces in a very different way mixed in with leisure and lifestyle residential spaces.” He added, “The most successful retailers, the survivors, are learning to draw in their customers with the promise of a personalised experience. Technology makes that all possible but it still needs a strong human element.”