Belfast Telegraph

Analysis: We need more than rates reform to address decline of high street

Analysis

It has been predicted that online retail shopping will expand from its current 19% to over 50% in the next 10 years
It has been predicted that online retail shopping will expand from its current 19% to over 50% in the next 10 years
John Simpson

By John Simpson

The 'high street' in many town centres is in long-term decline. Customers are being attracted to other retail and service outlets and too frequently the headlines read: "High streets hurting as Northern Ireland is bottom of (the ) footfall league again."

Reporting on the state of retailing business in Northern Ireland for June and July, Aodhan Connolly, the director of the NI Retail Consortium, had disappointing evidence.

He's said that it is "extremely disappointing that we are again at the bottom of the footfall table for the UK by some margin".

The Retail Consortium published the results of its market studies which gave three critical statistics for business in July.

• Footfall in all retailers fell by 5%

• Footfall in high street retailers fell by 5.5%

• Footfall in shopping centres fell by 3.7%

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The results for July are consistent with some longer-term concerns.

Making the assumption that measuring footfall is an acceptable proxy as an indication of shopping activity, or turnover, the statistics draw attention to two trends.

First, at an NI-wide level, retailing has become a slow growth sector. Second, for the larger urban centres such as greater Belfast, Derry-Londonderry, Newry, Craigavon and Ballymena, specialist shopping centres are proving more successful than the older high streets.

Simply to distinguish between the high street and the shopping centre to measure retail activity is a distorted choice. An uncertain, but acknowledged, factor in setting the patterns of retailing activity is the degree to which consumer retail spending is shifting partially to online ordering, backed-up by parcel delivery direct to a residential address.

One UK agency has forecast that online retail shopping will continue to expand from a current 19% of the total to more than 50% in the next 10 years.

It will be driven partly by demographic changes, partly by improved and quicker delivery services, and partly because there will be fewer shops available.

A further feature of consumer activity which is significant is the degree to which increases are more likely to be directed to the purchase of services rather than goods. Service spending has become a larger part of household budgets.

Looking to the future, the proportion of household budgets which is allocated to retail activity is in decline and, in addition, the proportion going to shopping centres or high streets, after the expansion of online shopping, will further decrease.

If average real household incomes increase by (probably) less than 2% each year and the proportion reaching shops in high streets, falls by 3%-4% each year, then there will be little surprise if conventional high streets will see turnover falling steadily, year by year.

Efforts to maintain the competitive position of high street stores will become important policy levers.

The size of the reduction becomes a critical but unknown variable, but the direction of travel is more certain.

The choice of policies to influence investment in retailing and its location has become critical.

Local government planners with a concern about the vitality of urban centres must adopt planning policies that are supportive of diverse and expanding urban centre activities.

Current urban management policies are orientated to discourage access to high streets by using private cars. No surprise, therefore, that specially designed shopping centres are attracting business at the expense of urban centres.

The argument can be made that current planning policies are inconsistent with more serious ideas on revitalising urban centres.

The large retail multiple stores are facing serious policy questions which, in turn, call for a supportive town planning regime.

The popular theme of the requests from existing retailers is that their profitability could be improved by a serious reform of the rating system.

Unfortunately, rating reform will not reverse the negative logic of the current incentives to take business away from congested urban centres.

Rating reform may become a favoured answer. It would be partial and not the best or whole answer.

Belfast Telegraph

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