In recent months, a number of retailers have either gone into administration or beyond, including big high street names like Jessops the camera and film chain, and bed-maker Dreams, which went into administration in March. Though the latter was sold to Sun Capital Partners for £35m, 95 stores will be closed with the loss of 400 jobs. The latest victim is stylish homestore Dwell which went into administration last month. This photogallery by the Telegraph on 2013’s high street casualties indicates that the brands we have come to recognise as the epitome of the British High Street are fast disappearing.
According to the Centre for Retail Research 2012 was the worst retail year since 2008, with more than 48,000 employees and almost 4,000 stores affected. It predicts 2013 may be even worse. A number of reasons for this have been suggested: a second economic downturn causing weak retail sales; the failure of a few retail giants (e.g. Peacocks and Comet) which hiked up the figures for affected employees and stores; and the closing of many companies that were able to survive a year or so of recession but not four years of low profits or losses.
In Ireland, B&Q Ireland, a subsidiary of Kingfisher Group, has appointed an “examiner” (an administrator under Irish law) to enable the business to continue trading in order to survive. It may close up to four of its nine stores. Monsoon/ Accessorize Ireland has also appointed an examiner.
Are there lessons to be learned from Comet, Britain’s second-largest electrical retailer, which closed in late 2012? It was established in 1933 and had grown to 243 stores and 6,500 employees. Though the credit crunch and competition from online retailers was identified as the main cause of its collapse, it had also come to have a poor reputation in knowledge of consumer electronics. Customers felt that the young sales people employed knew little beyond the four bullet points displayed on price boards.
In these tough financial times, consumers are taking their time before investing in large purchases. They do their research online, and consult consumer guides. Many are returning to the small independent trader who have a more in-depth knowledge of their specialist area than the large retail giants.
As more and more of these large stores go to the wall, is it time to see the return of the high street specialist store?
Economist frequently state that in a recession, it is the entrepreneur who survives the tough lean times by developing and selling products and services that are relevant despite the drop in disposable incomes.
The data shows that this has been the case in the UK. A new generation of young business owners are leading the way out of the downturn, according to the annual Simply Business Start-up Index, which reveals a 29 per cent rise in firms started by 18-25 year olds since the recession took hold in 2008.
There has also been a trend for retiree-age entrepreneurs – 2012 saw a 7.2 per cent increase in applications from those over the age of 65 – the biggest annual rise of all age groups. Over 65s now account for more than four per cent of all new business owners, gaining ground on the most prolific start-up age of 35-44 year olds (30%).
As part of the annual report, Simply Business conducted a start-up capital poll on a cross-section of 500 customers, to review the current landscape of finance and lending. This revealed that the majority of businesses start on a shoestring, with 58 per cent raising less than £1,000 to get off the ground and 39 per cent managing on less than £500. Most start-ups are self-funded, relying on savings (84%) or family (12%), with just five per cent receiving bank funding to launch their enterprise.
“The start-up figures for 2012 are encouraging as they show that enterprise is not being unduly suppressed by ongoing negativity in the economy,” comments Jason Stockwood, Simply Business CEO.
However Stockwood is not hopeful for the high street;
“The decline in retail trades is worrying as it suggests the government’s efforts to revive the high street are falling flat. This is clear evidence that a renewed focus is badly needed to help support local, independent businesses in particular.
The Federation of Small Businesses in the UK is still pushing its small business manifesto which it released some years ago. The Federation argues that affordable retailing is a sure way of revitalising local communities and high streets and offers a number of practical recommendations.
One such recommendation is procurement, an under-utilised tool in sustaining local communities, according to the FSB.
“Awarding public procurement contracts to small businesses is cost- efficient, offers quicker turnaround time and greater flexibility. It makes good economic sense, good business sense, good environmental sense and it keeps trade local” according to the Federation. Growing up in a small hardware business I witnessed the sense in this. From the refurbishing of the town hall, the church, the 18th century townhouse restored to its former glory, local businesses were sourced. In the lean times, before the Celtic tiger and the property boom, it was these procurements than kept businesses like my parents’ ticking over. The FSB recommends that government should ring fence 30% of the annual procurement budget for small business contracts.
Mike Cherry, FSB National Policy Chairman says
“Small businesses are the driving force of our economy and at the heart of our communities. However for small businesses to thrive Government and Local Government must think small first. They can do this by ensuring that procurement practices are transparent and easy for small businesses to engage with; by ensuring that parking is adequate and doesn’t scare shoppers away from our town-centres; and by making sure that planning legislation does not become a burden. We also need to encourage people to Keep Trade Local and remember to support their local shops and services. “
The FSB’s manifesto has yet to be taken seriously by the Government. Maybe the increasing number of abandoned shop fronts and boarded-up mega-stores will add to the sense of urgency already felt by communities, workers and small businesses.