A further 175,000 jobs will be shed 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, research warns.
More than 23,000 shops are forecast to close in 2019, according to the findings published on Monday in an annual report from the real estate adviser Altus Group.
The 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. They include both multiples or chains as well as independent stores and – in the hospitality sector – restaurants and casual dining outlets.
The seismic shift in shopping habits in the UK prompts the authors to predict that the overall value of retail property will tumble by 15.9% 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 underperforming stores. Retailers planning to close stores this year include Marks & Spencer and Debenhams.
Altus Group’s annual commercial real estate (CRE) innovation report found that 62% of major UK property owners and investors claim that Amazon and other online players have disrupted the retail property market.
A further 78% 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 a wake-up call for listed landlords and owners of major shopping centres such as Intu Properties and Hammerson.
“Retail of the future will use bricks-and-mortar spaces in a very different way mixed in with leisure and lifestyle residential spaces” the Altus Group managing director, Guillaume Fiastre, said. “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.”
The warning about plummeting retail values comes after the Postings shopping centre in Kirkcaldy, Fife, was put up for sale last week for £1.