We’re now reading about terrible trading conditions” in the press, currently driven by the fact that even the highly-regarded ‘Next’ is finding it tough.You can be sure there is going to be plenty more of this in the media and we are going to see a lot more empty shops.There’s no way I’m going to pretend that is somehow, good news BUT it’s crazy to blame all this on Brexit! There are SEVEN reasons why the retail sector is finding it tough:

 

1)       Every time a new development is announced, it talks of ‘a mixed development of homes and retail units’. It never mentions a corresponding number of closures elsewhere, so there are more and more shops for a market that is scarcely growing. What do you know, as a result an increasing number have to close down!?

 

2)       How often have you walked down a High Street and, as you get to the end, more and more shops are closed (or converted to charity shops)? Those are the struggling ones and they are very sensitive to any downturn. And of course, they’re very sensitive to those new developments with far better facilities.

 

3)       To read some newspapers, they haven’t heard about online shopping, which depending on the sector, has taking big chunks out of bricks and mortar shops. There’s only so much money people can spend, so of course retail sales are going to suffer. And the weakest always go to the wall first however hard they try.

 

4)       The fact is THERE ARE NOW FAR TOO MANY SHOPS! Wouldn’t it be great if some Councils worked this out and gave ‘Change of use’ planning permission for those end of high street shops to be converted into homes?

 

5)       There will also be sector issues e.g. this year’s unpredictable summer has been really tough for clothing retailers.

 

6)        Landlords are rarely prepared to adjust their rents to allow for these downturns: retail landlords are very often insurance companies and pension funds. They are concerned heavily with the long-term and they are often prepared to see empty shops for a couple of years, rather than write down the rental value. Very frustrating for the vast majority of people who have to live for today.

 

7)        And finally, yes there is going to be a Brexit factor: confidence is low at the moment and as I’ve previously said, people hold off on big ticket items when they are uncertain of the future. Also, we can guess that manufactured goods (e.g. white goods) coming into the UK will go up in price, due to our weaker pound. (Right now, I’m not allowing for any difference in tariffs once our negotiations are finalized in two years’ time because it would be total guesswork).

 

Chris Ingram 12/08/2016