Almost every day now the news comes of another retailer shutting up shop. In the last week alone, those have included Marks and Spencer, Carphone Warehouse, Carpetright, Mothercare, Byron, Topshop, Jamie’s Italian, House of Fraser, New Look and Carluccio’s.
Homebase has just been sold for £1 – yes, you read that correctly – and it’s obvious that the UK’s High Street is undergoing a radical transformation.
These changes are clearly outside the control of local councils, and also – it seems – of many retailers.
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But if one or more of the larger shops in Canterbury were to close the impact on our own High Street could be catastrophic, not only in terms of the economy, but also because it would leave a gaping hole in the street scene.
As much as we might love the higgledy-piggledy atmospheric nature of the old low rise streets in the city, one thing the resulting properties are not is suitable for modern retailing.
Apart from poor delivery access – something which results in far too many trucks being parked at random on the High Street – the size and shape of many of the shop units is unsuited to modern retailing.
Worse, the physical fabric of many of the buildings is poor, creating high maintenance costs and a poor image, which is the last thing retailers want.
It is amazing, for example, that Nasons and Debenhams manage to survive in their current premises.
While I’m no fan of bland shopping malls, there has to be some coherence to stores if there is to be any ease of use for shoppers and shop-owners alike.
Quirky may be fun, but it’s an expensive luxury in a sector which runs on wafer thin margins where volume of sales is key to survival.
So it’s not hard to imagine one or more major retailers closing down their Canterbury operations as the market gets tougher.
What is hard, though, is to imagine what might take their place. Few shops are physically suitable for conversion to residential usage, especially on the main shopping area, even if the council planners would permit such a change.
We can already see that long term vacant units like the former Curry’s store on Burgate are almost impossible to re-let. The restaurant sector in the city seems to have reached capacity, and isn’t taking up the slack.
One problem is the rental demands by the property owners. A quick look through the estate agents’ websites shows that perfectly ordinary small units in key locations – the High Street, Buttermarket, Burgate and so on – are being priced at astronomical amounts.
A shop on the Buttermarket, for example, is being marketed at just under £3,000 per month.
As retail profit margins are so tight, even if we assume a generous 10% margin, the retailer has to sell £30,000 of goods each and every month just to pay the rent.
It is no wonder that small retailers in particular are being forced out of the city centre.
One problem here is the way the property market works.
Owners want to maintain the capital value of their property, in case they ever want to sell it.
That is based on the rental yield, so that a high rental price equals a high value. It is, therefore, in the interests of the property owner to keep their asking rent high even if the shop remains unlet, since the notional value of the property is kept up by this mechanism.
That’s why owners are rarely interested in short-term lets: if that proves that the achievable rental is low then that drags down the market value – and in turn the balance sheet of the property owner.
For our city the question remains: what can be done? To begin with, we are in the lucky position that there are two dominant property owners which do not have purely commercial interests: the council and the Church.
Neither is able to simply give away leases, and neither wants to be (nor should be) responsible for causing a crash in the city property values which
would be uncontrolled and completely detrimental. But both are here to stay and can take the long view of what constitutes sensible management of the assets.
Both could, if they chose to, develop a strategy – perhaps in tandem with the Business Improvement District – to reduce our reliance on a few large retailers and encourage the growth of a much more interesting and dynamic small retail sector.
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Such a strategy would reduce the risk of large shop voids in the city centre, while enhancing the attractiveness of the city to visitors and encouraging local small enterprise.
That’s not a short term solution, and no-one is hoping for the large retailers to close down any time soon.
But there does need to be some sort of plan, and with the number of already vacant shop units we have it might just be a good idea if someone got on with making it happen.