Aurora Fashion president Stewart Binnie has said the company could dispense with more than half its stores, as the web continues to reshape the retail industry and with up to 70% of the company’s transactions now using the internet in some way.
But retailers at The Cloud Retail Week Conference today criticised landlords for being too inflexible in their terms and for insisting on high rents at a time when many high streets have empty shops.
Binnie said: “The nature of the high street is changing, but we are locked into property arrangements that are largely inflexible. The only way you can get out is to go into administration and come out again.”
Former AS Watson UK chief executive Jeremy Seigal agreed, saying: “The value of property will change, and unless landlords are prepared to accept that, we will have empty high streets with no tenants.”
DFS chief executive Ian Filby added: “Market forces are not working on the high street. Millions of people are shopping there every week, but the dynamics mean it’s becoming increasingly economically unviable for people to run shops on the high street. Many chain retailers also have shops that are too large and need resizing.” He said footfall has gone down by 1% a year for the last 20 years, while rents have continued to rise. “It’s an unhealthy brew,” he said.
Binnie said fashion brands such as Oasis and Warehouse, which Aurora owns, used to need between 150 and 200 stores in the UK. That number now stands at around 50 or 60 bigger stores.
“I think we can actually dispense with more than half of the stores we’ve got, and that’s a business that’s thriving.”
He added the nature of stores will change - most will be a lot bigger and locations will be carefully chosen. Filby added stores may become showrooms, rather than places customers go to buy products and said retailers said should invest heavily in the web as their “biggest store.”
Binnie said there are big challenges ahead as retailers decide on the estate they need for the next five years and work through the logistical challenges.
Binnie said: “This will shake up the high street to a much greater extent than anyone suggests. There’s trouble ahead - I have no doubt we’ll all come out the other side, but getting through is going to be horrendous.”