Join our community of smart investors

Bye bye high street

This is indeed what could happen by 2030, according to a report compiled by e-commerce delivery specialist ParcelHero. And the data used to establish the trend of declining activity makes sober reading. According to the Centre for Retail Research, there were 600,000 stores in the UK in 1950. By 2012 this had fallen to 290,000 and is projected to decline further to 220,000 by 2020. If this trend continues, then by 2030 there will be just 120,000 shops on the high street. The death sentence will be delivered by e-commerce, whereby customers elect to order goods over the internet and have them delivered. Now, anyone who has taken a day off work to wait in for a delivery that never arrives will understandably be sceptical. But delivery systems are becoming more sophisticated, as with Amazon Prime Now, which enables customers in London signed up for the service to receive delivery within one hour. In one move, it is now quicker to shop without leaving the house. In fact, at the current rate of growth, the internet will account for 40 per cent of retail sales by 2030, compared with around 17 per cent now.

There are other reasons why the existence of shops in the high street has come under pressure. Supermarkets, for example, operate on a low-margin/high-turnover business model, and there are more than 10,000 major grocery chain outlets in high streets. Recent trading has resulted in a boost sponsored by an increase in Christmas spending, but this seems unlikely to last. Outlets such as Tesco (TSCO) have reacted by boosting their online sales; Tesco is now second only to Amazon in terms of sales. But this still leaves the cost of maintaining the bricks and mortar in the physical stores. And the pressure is unlikely to go away. According to research and training charity IFD, in the next two years sales from convenience stores, discounters and the internet will overtake superstores and hypermarkets for the first time. Put another way, sales from superstores and hypermarkets are forecast to fall by 4 per cent at a time when overall sales are expected to grow by 16 per cent.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in