UK to lose 6.6 million sq ft of retail space27th May 2012

A recent study commissioned by rewards scheme operator Webloyalty has predicted a growth in the fashion retail sector of £7.9bn by 2015. However, the UK is set to lose almost 4,000 physical stores from our high streets.

The study by retail research specialist Conlumino shows that online growth will create a situation where the costs of running a physical fashion store outstrips the available increase in physical sales.

Once inflation is stripped out, spend at physical fashion stores will increase by just under 5% by 2015. In contrast, the cost of running physical stores is forecast to rise by 10.2% over the same period. It is inevitable that such a differential between costs and sales increases will make some space uneconomic. As a consequence, it is likely that the UK will continue to see a reduction in fashion store numbers and fashion retail space over the next few years.

The research forecasts that in order to maintain profitability, around 3,900 individual fashion shops will close by 2015, with a loss of 6.6 million sq ft of selling space. This is a decrease from 111,654,000 sq ft in 2011 to 105,009,000 by 2015, as retailers reassess how much space they need to drive sales.

According to Neil Saunders, Managing Director of Conlumino, this is not necessarily bad news for the fashion industry, as physical stores need to find their place in the multichannel environment: “Buying fashion today is a much more complex process than it used to be. Fashion stores are becoming polarised into those that act as points of contact or for functional purposes. Those that add significant value, are more experiential and act as brand enhancers.”