Following some festive cheer, January saw consumers seek to tighten their spending belts once more. December sales were boosted by a level of pent up demand which was driven in part by “austerity exhaustion”, but with 2012 came a slowdown as we again returned to our cautious ways. According to the latest figures from the British Retail Consortium, sales declined 0.3% on a like-for-like basis, the second worst January performance since the survey began in 1995. As demand slowed, any sales that were made last month are likely to have been driven by aggressive discounting through sales, promotions and incentives.
It is difficult to see strong rays of light for the year ahead and so we must consider what this will mean for administrations and retail space being returned to the market.
A report by the Local Data Company points out that shop vacancy rates remained stable at 14.3% during the second half of last year. Good news. However, with a bleak outlook for consumers, it is unsurprising that the research group has forecast an increase in vacancy for the year ahead. Rising unemployment in the short term, growing online sales and a significant number of retail leases ending in 2012 will all add to the woes of the high street.
In response to the recently completed ‘Portas Review’, the Government has announced its first initiative to address the problems facing UK high streets. Fledgling town centres have been given the opportunity to bid for a share of a £1million prize fund and the chance to have a dedicated support team, including Ms Portas herself, help revive their fortunes. The scheme has been described as the ‘golden ticket’ for struggling town centres, but £1million will not go far. Although it is positive to see some action being taken by the government to make some of Portas’ recommendations a reality, only time will tell if this latest scheme goes far enough to turn-around some of the UK’s worst affected high streets in these testing times.