The UK’s high streets have always been in flux, but changes have accelerated in recent decades due to a combination of demographic shifts, technological advances and variations in consumer preferences. These are some key factors likely to affect the performance and role of UK town centres in the coming years:
Economic and demographic change
The UK population is simultaneously growing, ageing and becoming more ethnically diverse, which presents opportunities for town centres to specialise in provision of services to these diverse populations. Another factor to consider is the continued national housing shortage due to a combination of population growth and a decrease in average household size. There may be a need to recycle land from current town centre uses (such as retail) to help address the need for living space for a growing population.
Consumer purchasing power and confidence
In the short to medium term, growth in overall retail sales may continue to be held back by a sluggish return of consumer confidence, especially in parts of the country where public sector employment accounts for a greater proportion of the total. During times of low consumer confidence, households tend to focus on repaying debt and saving, and spending on non-essentials tends to be postponed. Consumer spending power is being eroded by tax rises and above-inflation increases in energy prices and transport costs. In addition, pay rises in recent years have been significantly lower than the rate of inflation.
Retailers have to come to terms with longer-term changes in consumer preferences. This is especially evident in areas where products have become digital, such as music, books and newspapers. The decline of sales affecting music stores, bookstores and newsagents has been especially pronounced over the past decade, and these trends are expected to continue – for example, some national newspapers are now available as online editions only. If this continues, pressure will increase on newsagents to find a new role within the communities they serve.
The UK has been at the forefront of the international trends in favour of use of online shopping platforms. The share of online retail in the UK over the past decade have grown significantly in the past two decades, with much of the growth driven by the advent of new apps and mobile devices.
The pressure facing bricks-and-mortar retailers has resulted in significant downward pressures on rents that retail businesses can pay. In addition, the number of vacant units has significantly risen. Where tenants have gone out of business, the landlord becomes responsible for business rates paid on those properties. The decline in rental incomes and the increase in voids along the high street and across town centres have significantly reduced the value of those properties. Overall downward trends in retail property values makes redevelopment more challenging in towns and cities that are still awaiting substantial reinvestment in modern retail premises in order to compete more effectively with out-of-town retail parks.
Recent governments have emphasised the importance of localism and committed to giving local authorities and communities more control over strategic planning policy and other decisions, as well as over financial resources. The trend towards localism implies more local responsibility as well as empowerment, but the potential exists to create local vehicles and to fund these through variations in approaches to the taxation of local business and through other means.