Retail’s decline could be the opportunity to bring our cities back to life CHRIS GRIGG 28 JULY 2018 Daily Telegraph
The year 2018 has been a really tough one for many UK retailers. House of Fraser, Toys R Us and Poundworld are just three companies that have hit trouble.
According to the Centre for Retail Research, 24 major retailers had failed in the UK by the end of June, affecting 1,895 stores and 21,191 employees. Not since 2012, when almost 4,000 stores were closed and 50,000 people lost their jobs in the whole year, have we seen this degree of “distress”. Why is this happening?
A confluence of issues, including more caution from consumers, growing use of e-commerce and a variety of substantial cost pressures on both retailers and landlords has made this the moment when the sector experiences a structural shift, leading to reduced demand for shops.
Company voluntary arrangements, or CVAs, have added complication and controversy to the situation: designed back in the Eighties to offer a last chance restructuring for companies facing collapse, they are now often being used in a questionable way, to the detriment of both the successful retailers who help our high streets to thrive and to the owners, such as British Land, of the shops they occupy.
One of these CVAs, for House of Fraser, is due to be legally challenged, which may help to address the imbalance emerging in the system.
Against this backdrop, it has been suggested that the extent of remodelling needed to help our town centres thrive once more is comparable to the building programmes of the Victorian era or the rebuilding of post-war Britain. How do we achieve this?
First, we need to acknowledge that the increase of e-commerce means we will need fewer shops. A reduced amount of retail could be a blow for many urban centres that have devoted increasing amounts of space to shopping over the last 50 years, but it also presents an immense opportunity.
Town centres used to be a healthy mix of homes, pubs, restaurants, surgeries and schools, before growing consumption tipped the balance heavily in the direction of shops. This pushed homes to the edge of towns and increased car use.
Now, particularly with an ageing population, we need the exact opposite: homes and medical services at the heart of thriving urban environments, supported by shops, restaurants and amenities that support a strong sense of community.
In west London’s Ealing, Berkeley Group’s arm, St George, has created hundreds of new homes in the town next door to our busy shopping centre and close to a new Crossrail station which will take people to Bond Street in 11 minutes.
And I have high hopes for Birmingham, where former John Lewis managing director Andy Street is now West Midlands mayor and has secured £350m for new homes in the region at a rate of 16,000 a year.
In fact, the recent creation of metro mayors may provide a vehicle to overcome the second material issue, which is fragmentation of ownership. Centres are often owned by multiple parties: Oxford Street, which is owned by more than 200 different entities, is probably the most famous example.
Metro mayors, supported by the deliberately non-prescriptive nature of the Devolution Bill, could be perfectly positioned to take control. Councils would also benefit significantly from better compulsory purchase powers: they could then assemble sites in which a range of considered uses could replace failing retail and create an attractive, mixed-use neighbourhood.
Above all, we need a new conversation between government, retailers and property owners on how – together – we can reinvigorate our towns and city centres to thrive as they did for hundreds of years before shopping began to dominate.
We can all play a part in achieving this.
Chris Grigg is the chief executive of British Land.