While major brands and high street chains have been struggling over the past 12 months as a result of a downturn in the economic climate, one breed of retailer is bucking the trend. Boutiques are fighting back - creating a growing threat to bigger stores.
The independent retailers are becoming increasingly competitive - the question is why? According to research by analysts at Springboard, consumers concerned about the impact of Brexit on the UK economy are showing signs of reining in their spending. Cutting back on festive extravagance was one sign of consumer caution.
Following a survey of retailers, figures released on 17th December revealed footfall had fallen by 3% compared with the same period in 2017. With the UK scheduled to leave the European Union on Friday 29th March 2019, with no deal currently in place, analysts are forecasting the high street won't be picking up any time soon.
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Several major brands have been victims of the continued economic uncertainty. A number of huge high street retailers have either closed down, or revealed they're struggling. The latest big name facing problems is fashion chain New Look.
The brand has announced it may have to close up to 100 stores in the UK to improve profitability and reduce expenditure. The 100 stores include the 60 that were earmarked for closure under a voluntary arrangement which New Look entered into back in March 2018.
On 28th December, HMV revealed it had gone into administration, putting 2,000 jobs at risk. Administrators KPMG have been appointed to handle the shock collapse of the high street music store. The rise in digital entertainment has been blamed for the closure of the historic store, which was founded on 20th July 1921 in London.
One of the biggest brands to go into administration was Toys R Us. Despite months of talks, the retailer couldn't be saved and more than 3,000 jobs were lost as a result. A rescue plan (which included closing 26 stores running at a loss and paying lower rent for the remainder) wasn't enough to save the remaining outlets.
Marks & Spencer also reported a decrease in half-year revenue, after chief executive Steve Rowe announced the closure of 100 stores earlier in 2018. He said at the time they must ensure the "right stores" were in the "right place" to satisfy consumer demand.
Revenue at M&S decreased by 3.1% to £4.96 billion. This reflected a decline in sales in clothing, food and the home division. Rowe added he couldn't definitively say "job done" after the closure of the 100 stores, the implication being that further closures could follow.
Debenhams department chain revealed it was looking at closing up to 50 high street stores as profits plummeted. This would jeopardise up to 4,000 jobs. The stores haven't been identified yet, but they are expected to close over the next three to five years.
Major high street brands such as John Lewis, Primark and Superdry have all declared recent trading has been challenging, while fashion chain Bonmarché said there was no hope of a full-year profit following “unprecedented” trading conditions.
Visa’s UK consumer spending index for November 2018 revealed that spending overall had decreased by 0.7%, compared with the same period in 2017. This followed the emerging trend, announced in October 2018, when spending had fallen by 0.2% in comparison with the previous year.
Rise of boutiques
Despite the ongoing gloom for major high street brands, independents and boutiques are coming in to plug the gaps left by the loss of chain stores on the high street. The British Independent Retailers' Association has described the shift as, "reverting to older models of economic activity".
Research by the BIRA and the Local Data Company has revealed some surprising statistics: the number of independent stores opening in the UK has risen annually since 2009 and in some areas, there's a massive concentration of boutique stores.
In the well-to-do London suburb of Barnes, more than 96% of local retail stores are independent - giving it the highest concentration of boutiques in the UK. The south-west region of Britain has seen the biggest growth in independents, with 206 opening in recent years.
However, there are still more than 43,000 empty shops in the UK, which analysts say must be addressed. In some towns, there's a 20% vacancy rate.
Major firms' concerns
The fact that independent retailers are snapping up empty stores is proving a cause for concern for the major firms. The growth in boutiques is eating into a market which has traditionally belonged to large retail businesses.
Research has shown that the flexibility and pricing offered by independents are among the factors attracting consumers. As a result, the signs are that customers are benefitting from lower prices as the large retailers battle it out to win their business.
In the run-up to Christmas, Sports Direct owner Mike Ashley reportedly said November had been "unbelievably bad" and "the worst on record" in terms of sales. Trying to win last-minute shoppers in December, goods were sold with big discounts.
Ashley said no-one could possibly have budgeted for the November figures, adding that they were the type of sales that could "smash retailers to pieces".
Michael Weedon, deputy chief executive of the BIRA, said as chains were cutting their links to our high streets, the boutiques were taking full advantage of this. Despite continually tough trading conditions, independents were steadily rising.
Independent fashion stores are among the biggest beneficiaries of the current trend. Nottingham in the East Midlands has enjoyed a 125.93% increase in small fashion businesses since 2015.
The second-highest growth in independent fashion businesses was experienced in Liverpool at 76.92% and the third-highest was in Leicester, Nottingham's neighbouring city, at 76%.
Analysts say there are a number of reasons for the boom. These include new "support the high street" initiatives to promote independent local shopping, which are luring customers away from the traditional chains. In addition, there has been a shift in demand to bespoke boutique clothing from "fast fashion", spurring more start-ups. A growth in "bedroom entrepreneurs" has also been cited, as young designers seek to make money from their hobby.
While shoppers seem happy to see more boutiques on the high streets, the larger retailers are trying to adapt. A number of one-time BHS department stores have been taken over by cut-price retailers, such as Sports Direct, Primark, Wilko and Days. Retail entrepreneur Philip Day came up with the new multi-brand concept to put them all under one roof.
A similar concept was adopted by property development and investment company, Hammerson - a major shopping mall owner. The company has taken back a House of Fraser site at Leicester's Highcross Centre, turning the top floor into a car park. Zara has taken over the prime retail space, while the former service yard has been transformed into a row of restaurants.
With no-one able to predict the long-term future of the retail sector until the Brexit negotiations are finalised one way or another, it remains to be seen whether the rise of the boutiques will continue at its present pace, or whether the bigger brands will fight back.
Dress your boutique to impress
KAS Shopfittings provides a wide range of fittings for boutiques and independent retailers. We stock everything you need, including shelving, counters, slatwall fittings and panels, wooden and melamine shelves, garment racks and more. Give us a call on 01793 754230 for more information.