UK retail industry suffered worst year on record in 2019

Job cuts and store closures on ailing high streets pummelled sector, data shows

Last year was the worst on record for British retail, with sales falling for the first time in 24 years as a dire performance on the high street dragged down the industry.

Total sales slipped by 0.1% in 2019, according to the British Retail Consortium (BRC) and advisory firm KPMG, the lowest since they began monitoring the sector in 1995.

The downturn was influenced by a 0.9% fall in sales in the crucial final two months of the year when many retailers get most of their annual profits. That decline was partly driven by online sales rising by 2.6% in November and December.

“2019 was the worst year on record and the first year to show an overall decline in retail sales,” said Helen Dickinson, the chief executive of the BRC.

She said this was reflected in job losses, shop closures and company restructurings that hit the industry last year, as well as weak consumer demand.

Dickinson said: “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.”

Retailers were facing the challenge of the shift to online shopping and more cautious spending, triggered by economic uncertainty and concerns about the environment, she said.

The shift towards renting and a soft housing market, as well as the trend towards buying and owning less “stuff”, also hit retail.

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December figures from Barclaycard indicated a move away from buying goods towards spending on experiences. The data, published on Thursday, indicated a 19% rise in cinema ticket sales, 11.7% increase in spending in pubs and 12.5% jump in takeaway orders, while spending on clothing, toys and computer games contracted.

The figures shine a light on a terrible year for the high street during which thousands of stores have closed and 140,000 shop staff have lost their jobs. A string of well-known names have been forced to call in administrators.

The fashion chains Karen Millen, Coast and Forever 21, Scottish department store Watt Brothers, pawn shop Albermarle & Bond, and the Jamie’s Italian restaurant group all disappeared from the high street last year.

In addition, retailers including Topshop, Dorothy Perkins and Miss Selfridge owner Arcadia, HMV, Laura Ashley, Bathstore, LK Bennett and cake and cafe group Patisserie Valerie have closed a large number of outlets as part of a restructuring.

More than 12% of stores now stand empty, according to analysts at Local Data Company, compared with 11.5% a year ago.

Ronald Nyakairu, its lead analyst, said he expected the pace of closures to continue as those retailers most affected by the shift to online, such as fashion, were consolidating into fewer bigger sites.

“Retailers are centralising. Where they can have a city centre store that serves a whole metropolitan area, they will,” he said.

This week the exodus continued with Mothercare and Links of London to close all their UK stores.

That comes after non-food retailers took the brunt of the pain in 2019 as sales fell 1.6% in the final quarter of the year, while food sales rose just 0.7%, according to the BRC and KPMG.

Paul Martin, the UK head of retail at KPMG, said: “For many players Christmas did not deliver the results it has in the past.”

As more than a third of non-food retail sales were made online in December, the future of a string of other high street businesses remains in the balance.

The fashion retailer Bonmarché and camera group Jessops, which are both seeking a rescue deal after falling into administration, and Beales, the department store which needs a cash bailout, are all likely to close stores.

Questions also remain about the financial stability of Debenhams, which is closing 19 department stores this month. House of Fraser is expected to close up to 20 of its remaining 52 stores this year.

“Looking forward, the public’s confidence in Britain’s trade negotiations will have a big impact on spending over the coming year,” Dickinson said.

“There are many ongoing challenges for retailers: to drive up productivity, continue to raise wages, improve recyclability of products and cut waste.”

Contributor

Sarah Butler

The GuardianTramp

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