As we enter a new year, there is little to celebrate for the UK retail industry. Reports show that the British high street suffered its worst year in 25 years, with sales declining for the first time since 1995. The British Retail Consortium, an organisation that processes half of all UK debit and credit card transactions, reported that total sales slipped by 0.1% in 2019, the first overall decline in 25 years. A big part of this decline was due to decreased sales in the months leading up to Christmas. November and December sales fell by 0.9%, a catastrophic figure for businesses relying on festive business to stay afloat.
Political uncertainty and the increasing domination of internet shopping have contributed to a nightmare 2019 for most retailers, with several major companies going bust and others announcing extensive store closures. Helen Dickinson, chief executive of the BRC, gives her view on the causes of the slump:
“Twice the UK faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election, further weakening demand for the festive period.”
She also cites changing social attitudes towards shopping, spurred on by increased awareness of the environmental impact of excessive consumerism:
“Retailers also faced challenges as consumers became both more cautious and more conscientious as they went about their Christmas shopping.”
Experiences instead of things
Interestingly, not all areas of retail were hit equally. It seems that many people have shifted their priorities from owning items to having meaningful experiences. Environmental concern and a trend for minimalism have encouraged consumers to invest in memories rather than possessions. Barclaycard reported a huge 19% jump in the sales of cinema tickets in December, and spending in pubs and restaurants also showed a marked increase.
But this is of little consolation to the struggling high street. 2019 saw the demise of Jessops, Mothercare, Karen Millen and Forever 21, while stalwarts such as HMV and Debenhams found themselves in serious trouble. Overall, more than 12% of UK stores currently stand empty.
What will 2020 bring?
According to Helen Dickinson, the outcome of Brexit will be a key factor in the future of the British high street:
“Looking forward, the public’s confidence in Britain’s trade negotiations will have a big impact on spending over the coming year.”
She adds that the only way for retailers to survive is to be mindful of shoppers’ ethical and environmental concerns:
“There are many ongoing challenges for retailers: to drive up productivity, continue to raise wages, improve the recyclability of products and cut waste.”
The message is clear. For the high street to survive it has to modernise.