One in five stores are expected to disappear from the high street in the next five years due to the increasing popularity of online retail and rising operating costs, according to a new report.
The new report by the Centre for Retail Research (CRR), Retail Futures 2018, predicts 22% of high street stores across the UK will shut, resulting in 316,000 job losses by 2018 as the high street continues to struggle.
This will cause the UK’s unemployment rate to increase by almost 13%. The unemployment rate is currently 7.8%.
Meanwhile store vacancy rates could almost double to 24% by 2018.
The CRR believes online retail will continue to pile the pressure on bricks and mortar retailers as online retail is set to account for 21.5% of total retail sales by 2018, up from 12.7% today. This would give etailers in the UK the highest share of total retail sales in the world.
The CRR said this would mean that with those retailers with a strong online presence now need just 70 high street stores to create a national presence compared to 250 in the mid 2000s.
In addition, retailers’ operating costs are increasing at a faster rate than consumer spending, which since 2006 have grown 12% and 20% respectively. The high street’s share of consumer spending is expected to continue to decline to 40.2% in 2014 from 50% in 2000.
CRR predicts that 164 companies will collapse by 2018, impacting 22,600 stores and 140,000 staff in the process. Around 50% of their stores are predicted to close.
CRR director Professor Joshua Bamfield believes the retail sector needs a £320m fund to redevelop town centres, create more service, entertainment and leisure outlets and turn empty shops into residential accommodation and create more facilities where there is local demand.
He added: “This is just the start of an ongoing investment requirement. High streets need to combine the enthusiasm generated by Mary Portas with realistic and well-managed plans. The focus should be on declining secondary and tertiary sites in lower income areas.”