Is a booming UK high street a thing of the past?
More high street shops are set to close their doors in 2018 than in any year in the last decade, according to new figures.
The Centre for Retail Research has suggested that more than 10,000 retail stores are expected to shut down this year and to change use away from retail.
This comes on top of nearly 61,000 retail spaces that have closed since the start of 2012, with many of the shop voids either converted for housing or office needs, or filled with businesses from other sectors.
A study from earlier this year found that one in five high street stores would close in 2018, while a further 31,000 retail shops are predicted to close by 2022.
Weak growth, rising competition from online retailers and increased business rates were named as key factors behind the decline of high street stores.
To put things in perspective, online retailers accounted for just 7.7% of the overall retail market in 2008, a figure that has now increased to 17.8%.
Meanwhile data from the British Retail Consortium reveals that shop price inflation in May has fallen to its lowest level since January 2017, meaning more retailers are under pressure.
Around three million people are employed in the retail sector so store closures also result in job losses – an estimated 380,000 roles could be lost by predicted closures in the next four years.
Numerous major retailers have already entering into insolvency processes in 2018, with several opting for company voluntary arrangements (CVA) in a bid to reduce store numbers and get reduced rental agreements.
The legally binding agreement allows a business to freeze its unsecured debts and to develop a payment schedule and new terms that should allow it to keep trading.
A CVA offers a highly flexible solution for struggling businesses and a proposal can be made by an administrator when an administration is underway, or by a liquidator when a company has been wound up.
Company directors can also propose a CVA if they act quickly, provided that the business is not subject to administration or in liquidation.
By Phil Smith