Friday 20 April 2018

House of Closure?

Not a great end to the week in yet another of the long-drawn out retail sector decimation.


Debenhams has don't he usual trick of blaming the weather for its very poor Christmas when in the next breath its CEO admits that Clothing is a massive problem for it, but maybe all the other Chinese tat that it stocks will save it.


House of Fraser also has called in the insolvency specialists. This I can relate to with some anecdata - there is a House of Fraser opposite where I work in the City. I can honestly say I can't afford a single product they sell - it is very high end tat indeed with prices to match. The store always seems busy but you rarely see people walking out with actuals bags. It really does not surprise me to see them struggling, who the hell wants £250 shoes or £200 perfume on a regular basis?


Pre-pack administrations and CVA's  - where companies reduce their rents on in one swipe to try to survive are common practice and no doubt what House of Fraser will be aiming for in this case.


Overall though, the internet continues to destroy retail piece by piece. Still the Governments of all stripes happily let the internet retailers work out of cheap warehouses whilst high street rates and rents are simply beyond imagination - they have been declining a while now even in London but from stratospheric levels. It is beyond me as to why Governments cannot do anything to preserve the high streets and culture of the Country - its not nothing to do with Capitalism in the sense of change must be allowed to happen as technology alters the commercial landscape, yet the tax system is simply being abused by the new entrants to the market. This is causing the harm to city centres which will be hard to recover from, I am amazed that so many coffee shops can currently exist and that demand is there. The collapse in tax revenues from retail also hits local jobs and local government incomes disproportionately - the fact it is ignored by Government continues to amaze me - but it has been this way for over 15 years now!

20 comments:

Anonymous said...

I'm wondering (as the UK middle classes are hollowed out) how long Majestic Wine can last, my local branch is always pretty empty. Or do people order online?

One thing I've also noticed is that generic high street "car shops" like Motorworld or whatever have vanished over the last ten years. Halfords is last man standing, though Euro Car Parts are opening stores in Screwfix-type locations i.e. not high streets.

But our seemingly endless thirst for upmarket garden centres and high street coffee is as yet unslaked. I'm talking middle England rather than diverse cities though.

I hope the National Trust has worked out what they'll do for volunteers when the last final salary pensioner has died. I can see a lot of stuff being nicked, either by professional visitors or with the connivance of poorer "volunteers".

Anonymous said...

The complaint about the tax system is misplaced. If rates are cut then rents are going up £ for £. The ability to do online in minutes what used to consume hours of a weekend slogging into town is why retailers are suffering.

andrew said...


The same issue has bubbled to the surface in Clevedon (where I live).
There is a drive to update the lower town shopping area, one councillor seems to be pushing the development of a new out of town shopping centre with a big car park linked to the M5.
The originality of this idea is astounding, it may be based on the theory that if it was a success 10 miles north and 10 miles south, there will be ample demand for in the middle.

The same issue writ small struck me in Venice (was on hol this week). The shops are full of murano glass and painted plaster masks and no-one buying them. The restaurants were full.

Having said that, for the first time in memory there is only one shop in the high street I live on that is empty / being refurbished.
A local printers / gift card shop sells cards painted by local artists that you cannot get anywhere else.

The shops cannot compete with a warehouse in Darlington posting chinese tat.
So things will change.

Right now, that warehouse does have a relative tax advantage and that can only be corrected on a national scale - or wider as the warehouse may be based in Dublin and of course the border will be transparent.

When a businesses based tax can be avoided by just moving address, the only thing to do is to move the incidence of the tax from the business's location to the purchaser's location - i.e. VAT.




Raedwald said...

Isn't the death of the urban high street just following the trend started may years ago in small market towns? Here, where residential rents grossly exceeded those that could be made from niche shops selling knitting wool, oranges, or paraffin and tap washers, ground floor shops soon became living rooms, the Grade II listed windows veiled internally with thick Yorkshire netties. And those crooked, inglenooked, low beamed country pubs you remember from your youth are now cosy family homes, sandblasted beyond recognition and distinctively marked with Farrow and Ball.

In Socialist Portugal, with rent controls, niche shops survive on hardly any sales at all, but the roofs are all falling in as landlords cannot afford repairs. Whilst the gap between residential and commercial yields is so wide for buildings that can't be demolished, or land values for alternative use where they can be makes development attractive, I fear nothing can stop the march of progress.

Intervening with tax measures in markets that aren't broken - that one might say are functioning as they should be - surely just distorts economic reality and postpones the day of reckoning.

In London one can now order online, without speaking to a single person or donning fresh underpants, for 24 hours a day and for delivery within the hour, just about every imaginable comestible cooked or raw, in the style of 84 different national cuisines, together with beer, wine, fags and whatever. Who needs shops?

Electro-Kevin said...

Do what I do.

Cancel all your charity subscriptions - you know, the ones with highly paid execs - and pay over the odds for stuff on your local high street. Use the pubs and use the restaurants tipping well.

If you don't then they will not be there and then your house price will suffer for it.

Look at it as charity beginning at home. Keeping your locals in good employment.

I avoid Wetherspoons and Costa and it's not because I can afford it but because I know that we'll all be next once the council has nothing left to stick its proboscis into.

Bill Quango MP said...

I've been looking at some town regeneration schemes. All share a theme.
The flagship idea is always 'revamp the open square- bandstand- civic garden' area. Make it bigger. With better seating. Much more able to hold street theatre and events and bands or whatever.The old bus terminal outside the Bull Ring etc.

Replacing the town centre of Abbingdon or Sutton Coldfield with a bigger stage won't be much use.

Can't say I'm much of a fan. Although this clearly does work, it ONLY works where the offer is already excellent. So Bath. Guildford. Kingston.

Idea 2 is a very airy fairy 'council-landlords-civic leaders-local groups' use for space seems to me to be a total waste of time. Sure its nicer to have a 'cycling fitness expression' centre instead of an empty shop. But that isnn't an actual shop. No one visits the town for the 'help yourself to a free book' in a dump of a retail unit.

idea 3 has the most merit. The edges of retail space conversion to housing. This is massively overdue.Shrinking the retail space is necessary in very many towns and cities.
The outer 'c' locations are the most in need of axing and generally the easiest to convert. Easiest in terms of having pavements. Side roads. Probably was housing before. Flats above property. Easy to isolate and domestic.
Nightmare in terms of hundreds of landlords. Leases. Ownership and access. Sub lets, etc.

CU is spot on. 15 years of total inactivity by HMG. The tipping point has already been reached. On stats the high street outperforms online. But its a false comparison I don't believe the civil service have grasped.
Profitability is far, far higher online.

The high street adds in bakers. Barbers. Tattoo. Coffee shops. Charity shops. All doing OK. because their margins are huge or they can't be moved online or, with nail bars and piercings, both.
But actual shops are losing money.

We stopped reporting on retail as a monthly feature here about 5 years ago. Simply because the news was always the same. Offline bad. Online good.
And nothing new announced. Except a massive rates rise.

There are plenty of better options for town centers than the popular {ie - it costs bugger all} street performance/cafe/dancing/ ideal.
We do not have the weather for it. It cannot be an idea for July/Aug and have any chance of success.
Its 20th april. And its the SECOND day of spring. A month ago we had a foot of snow everywhere.

So, while its nice to see a serious focus from country councils on regeneration, most are asking the wrong people. Civic groups and government departments looking to offload a bit of the shrubbery UK budget aren't going to come up with anything not already tried.

Raedwald said...

Bill - completely agree re misfocus of council 'interventions'. The first mistake they all make is to use a windfall capital pot to create assets they don't have the revenue pot to maintain - the old s.106 was notorious for this. Very soon the new bandstand will be covered in grafitti, the lamps broken, gutters blocked and weeds growing through the stage.

Next they have to understand that however strongly they feel the benefits of gentrification, they can't install a fishmonger on demand in a decaying parade in the hope that portuguese sardines will be the catalyst of a shopping revival.

I've done a few secondary / tertiary shopping parades in London - successfully. The basic tier is a betting shop, fried chicken / kebab shop / off licence and or newsagent. To get a bakery, pharmacy and more you need footfall. I once won a huge gamble on a dying secondary shopping street by taking out all the on-street parking outside the shops and putting it at either end, then widening the footways and including loading / taxi bays. Once we'd actually got people walking the street, animating it, everyone's takings not only held steady but started to increase. Many thanks to the council highways officers and councillors who stood firm against the fury of the traders, all of whom imagined that the parking space right outside their window was the answer. Some things are counter-intuitive.

Again, we rescued a centre that had been deserted at night. They'd installed high intensity but stupidly placed floodlights that created threatening areas of deep shadow perfect for hiding villains; the shopfronts were a solid wall of galvanised slats from one end to the other. The two pubs were taken over by druggies and thugs and the licensed cafe closed early. We changed the lightimg for even, friendly, revealing illumination and after proving to the traders that perforated or slotted shutters were not only just as effective but could actually provide free advertising through window displays we animated the shopfronts. One of the pubcos changed their tenant for the better, the cafe re-opened at night.

Part of the problem with threatened shopping parades / secondary centres is the ad-hoc remedies are often knee-jerk and just make things worse.

CityUnslicker said...

to who needs shops?

what is so amazing about your house that you don't ever WANT to leave it? I doubt it is reading this blog all day :o)

Anonymous said...

Very amused that our local Council, South Somerset, have purchased as investments the massive town centre M & S and a Wilkinsons as well. I assume they have borrowed funds at a very low rate from the PWLB. What could possibly go wrong?

The same Council want to raise car parking charges when the car parks are half empty most of the time.

Left hand / right hand?

Sobers said...

"In London one can now order online, without speaking to a single person or donning fresh underpants, for 24 hours a day and for delivery within the hour, just about every imaginable comestible cooked or raw, in the style of 84 different national cuisines, together with beer, wine, fags and whatever. Who needs shops?"

Bully for London. What about everywhere else?

Bill Quango MP said...

Anon: It was a south somerset leaflet press release I was reading last.
What town is this one?

Electro-Kevin said...

"what is so amazing about your house that you don't ever WANT to leave it? I doubt it is reading this blog all day :o)"

Well actually ...

Anonymous said...

andrew - Clevedon is one of the lucky ones, nice seaside (considering it's up channel), nice pier, going up as Brits (especially with families) move from cities. Lots of new flats and conversions (I wonder who'll take on that derelict pub opposite the pier? loadsapotential). Should do OK, like many a small Cotswold town, or like Thornbury, nice little centre despite Cribbs Causeway being a shortish drive away.

But it's more the Redditches and Gloucesters of this world which are going to struggle. Too many retail sheds in different locations losing outlets, then they're not replaced. Simultaneously the high street fills up with charity shops.

dearieme said...

"the fury of the traders, all of whom imagined that the parking space right outside their window was the answer": when I was a boy my father pointed to the stupidity of some retailers who would park all day in the parking space in front of their shop.

Anonymous said...

@ BQ MP



https://www.somersetlive.co.uk/news/somerset-news/yeovil-marks-spencer-building-bought-563251

https://www.somersetlive.co.uk/whats-on/whats-on-news/ms-wont-comment-future-somerset-748525

Bill Quango MP said...

Thanks - I know that site very well.
Its the other end of town they need to worry about.
I remember looking at a unit by the bus station 15 years ago. The rates were too high.
15 years on, it still hasn't been let.

formertory said...

This is causing the harm to city centres which will be hard to recover from, I am amazed that so many coffee shops can currently exist and that demand is there. The collapse in tax revenues from retail also hits local jobs and local government incomes disproportionately - the fact it is ignored by Government continues to amaze me - but it has been this way for over 15 years now!

I enjoyed your rant, but was promptly reminded of the good M. Bastiat and his Candlemakers' Petition......

(There's a distinct shortage of wheelwrights in our High Street, too. )

James Higham said...

who the hell wants £250 shoes

Depends who the maker is.

Anonymous said...

@ BQ MP

They purchased the Wilko building as well which is at the other end of town.

https://www.somersetlive.co.uk/news/somerset-news/unexpected-new-owners-announced-wilko-815803

Bill Quango MP said...

Interesting.
I wonder what the current lease arrangements are?
Both of those units are giants. If M&S pulled out, the council would never find another tennant.