Did COVID Kill the UK High-Street?

While the reopening of shopping outlets has led to a flurry of foot-traffic on the UK’s high-streets, the reality of the retail sector is less encouraging than it seems. You might have to mask-up and jostle your way down Oxford Street, but industry experts assure us that this won’t be the case for long. Why? Because soon there won’t be many shops.

How Did COVID-19 Impact the Retail Sector?

With few exceptions, the pandemic was nothing short of a catastrophe for UK retail businesses. A full quarter of 2020 was spent under lockdown, with non-essential trade brought to a complete halt. While economists suggest that this drastic measure was necessary for the economy to bounce back in the long-term, many of the UK’s retail giants—H&M and Debenhams to name just two—may never recover. Damage to the retail sector was already evident by June. Midway through the year, over thirty retail brands had already gone under, resulting in over 1,600 shop closures. Two months on, and the figures appear to be worsening, with more retail outlets either downsizing or bowing out. 

Did COVID kill the UK High Street?

Yes and No. As several commentators have pointed out, the 3 months’ halt on non-essential retail was not the cause of the high-street’s downfall, but the final nail in its coffin. Thanks to dwindling consumer spending and the steady rise in Internet shopping, high-street retailers had to compete for an ever-shrinking market share. And despite the fact that many retailers had online stores, most were not prepared to transition fully to online shopping when COVID hit. Retailers that did not already have large-scale, sophisticated logistics in place lost their clients to companies that did. (Amazon’s stock price has risen by over 25% in 2020!)

What Does that Mean For Commercial Property?

So, if high-street retailers’ incomes have dwindled or stalled completely, what does this mean for commercial landlords? Commercial leases tend to be long term (average 10 years) and it’s safe to say that tenants and landlords entering into those agreements did so without planning for a global pandemic. But then 2020 happened, so what now? Join us next week to find out!