Arcadia closures could lead to more physical stores shutting - analyst

By

Sandra Halliday

Published
Mar 18, 2019

UK physical stores fashion retail is caught up in a cycle of closures leading to locations declining. This then means even more closures, an analyst said at the weekend, following news that Arcadia is planning to shut a raft of its stores.

With the Topshop owner said to be mulling a CVA, Senior Retail Analyst at GlobalData, Sofie Willmott, said the presumed Arcadia closure plan is no surprise given the group's current challenges. But she added that such large-scale moves by major names could accelerate the decline of high streets and some malls via a domino effect.

“Clothing & footwear spend continues to shift online and rising operating costs make physical locations less viable,” she said. “High streets will be the hardest hit with already-declining spend being further impacted by significant branch closure plans at Arcadia as well as major players Debenhams and Marks & Spencer. The shuttering of anchor stores in town centres will encourage consumers to go elsewhere to purchase clothing & footwear, negatively impacting other retailers in the area.”

The research specialist is forecasting that fashion will be the fastest declining sector in town centres over the next five years with spend falling 13.8% between 2018 and 2023, versus the total town centres market which is set to decline 1.9%.

Town centres will be propped up by essential product sectors such as food & grocery and health & beauty and it’s undeniable that the absence of fashion from many towns centres is already noticeable. Some years ago, every high street (even the smaller ones) had a ‘dress shop’, but such stores are long gone. However, the suggestion that remaining high streets with a fashion presence could decline further is the strongest sign yet that the migration to online is biting.

A number of analysts have said that the UK has too much capacity as far as physical stores are concerned with some even going as far as saying the country has around double the number of shops that it needs and can support.

Wilmott added: “While town centres accounted for over 40% of clothing & footwear spend in 2013, other locations which are better able to meet shoppers’ needs such as supermalls and retail parks, as well as the online channel, have tempted consumers away with high streets forecast to account for just 25.9% of spend by 2023.”