Jamie’s Italian and Barbecoa, Strada, Byron, Prezzo, Chimichanga, MEXIco, Cleaver, Square Pie, EAT – the growing list of chain restaurants in the UK which have either completely closed or are closing several restaurants.
The fashion store East, shoe chain Shoon, bed specialists Warren Evans and Feather & Black, toy store Toys R Us, electronic store Maplin have all gone into administration or liquidation. Meanwhile House of Fraser, Debenhams and New Look are all struggling, with all three considering large-scale closures of stores or space.
Even grocery retailers Tesco, Sainsburys and Morrisons have announced staff redundancies. So, what is happening?
Changing generation, changing tastes
People today are social by nature and will be drawn to gathering places to share ideas and be entertained. Which is why there are some 23,000 coffee shops today in the UK (as against 10,000 a decade ago).
The coffee shop has become a social hub where people socialise, work, meet tinder dates. People want selfie and photo friendly places to shop and eat. They don’t just go there for purchases or to eat.
Online and mobile shopping
Shops are open for around 10 to 12 hours a day. And larger shops face a 6-hour open limit on Sundays. Smartphones don’t have to close (well not legally anyway) certain hours. Shop on the train, shop on the go, shop in the middle of the night, shop whenever you want.
Business rates (local taxes), rising rents, higher minimum and living wages are all causing financial difficulties.
Inflation and squeezed incomes
Discretionary spending has reduced due to squeezed income as inflation rises.
Wages have been rising at a slower pace than inflation – and shoppers have less disposable income to spend in stores and restaurants.
By volume, retail sales have continued to grow but at a much slower rate – falling from from 4.7% in 2016 to 1.9% in 2017.
Too many shops in the wrong places
Big out of town centres were once the trend – no longer now. Smaller, more convenient and better designed stores is what customers demand now.
Stores are not warehouses; they are environments to entertain, educate and discover. Stores are soon to be home to dynamic experiences that build loyalty and affinity.
The store of the future doesn’t have walls – virtual reality breaks them down and can help companies continually evolve and create a new experience over and over again. Stores can be open spaces to convene, to build community.
In food, increasing numbers of people now prefer to buy local and often.
Fewer big weekly shops mean out-of-town superstores are under pressure and the big supermarkets are trying to lure in other retailers to take space they no longer need.
Owners squeezing dividends running companies into debt
This has been a recurring theme for VC run retailers and restaurant chains