A vicious circle of high street neglect

The news last week that the UK has finally edged out of a recession will mean very little to retailers that are only just starting on a very long road to recovery. And even less to those that have already gone to the wall.

Thousands of shops have been closed by failing retailers or companies rationalising their portfolios. The scale of this becomes apparent when you look at the findings from Local Data Company (LDC), which conducts in-depth research into more than 700 town and city centres across the UK and has recorded a tripling in shop vacancy rates in the past 18 months from 4% to 12%.

And while figures published from property agency Colliers CRE show there are some prime high streets where void rates are actually falling, for the more vulnerable towns and high streets - where its study shows voids rose by 2% in the six months to October - there is still much to fear. So what does this mean in real terms for retailers and shoppers in the worst-hit towns and what is being done to support them?

Colliers CRE director of research consultancy Richard Doidge says: “There’s no magic solution at the moment. In some places as the economy picks up void rates will fall. In others we need to do something over and above the norm for retail to revitalise the town centre.”

While it’s not alone in its suffering, Wolverhampton is a case in point of those cities that have been hard hit. Figures from LDC reveal that the Black Country city has the second highest proportion of empty stores in the UK - a staggering 23%. When you compare this with the national average of 14.3%, based on a sample of cities and towns assessed by Colliers CRE in October, the extent of the problem is clear.

The latest research from LDC shows in stark terms why Wolverhampton is in its present state. Perhaps most depressing out of all of LDC’s figures is the fact that there were twice as many shops closing in Wolverhampton as were opening in the six months to December last year.

Leaking catchment

Competition from a host of neighbouring centres both small and large is causing major leakage from the city that retailers are struggling to stop. The giant Merry Hill shopping centre is nearby, and Birmingham is not much further, and as the shopping offer declines in Wolverhampton the harder it will be to keep the shoppers.

As LDC business development director Matthew Hopkinson explains: “Wolverhampton’s vacancy rate is not untypical of a centre that sits in the shadow of such a powerful retail centre such as Birmingham. Birmingham has three major shopping centres and a national standard presence of quality retail space and offer. If you don’t work or live in Wolverhampton why would you go there?”

Two of the biggest names to have gone, Woolworths and Oasis, have left gaping voids in what was once the strongest shopping area of the city, near the Mander Centre. The surrounding streets are a sad reminder of how the city has taken some serious hits in this recession. With over a third of Wolverhampton’s 100 empty stores in this patch alone, locals hold out very little hope for an escape from the vicious circle any time soon.

Locally based property agent Michael Tromans, who is a partner at his eponymous surveying firm, is facing a thankless task of trying to drum up retail demand.

He says: “You only have to spend 10 minutes walking around town to see that there’s lots of new empty space. The area around the Mander Centre used to be the main shopping area in town. There’s been a marked decline in that and other parts of the city.

“Where it all leaves us we just don’t know. Rental values have dropped significantly and unemployment has risen and this is reflected in the spending power.”

Plagued by unemployment

And looking at employment figures for Wolverhampton you can see why the retailers are struggling so much. 8.2% of the town’s job market is claiming jobseekers allowance - the highest of any town in the West Midlands, which itself has the second highest percentage of any region. Given that the city is bucking the national trend for a decline in new claimants, the prediction by Colliers CRE of a growing divide between the weak and strong areas already seems to be becoming reality.

Talk to anyone who knows the Wolverhampton retail market and soon the conversation will turn to the fact that by now work should be well under way on a major £300m project, the Summer Row shopping centre. Insurmountable financial problems at Dutch developer Multi have left the scheme, and the city, in limbo. Not only is the delay throttling progress, it is also gradually putting off more and more retailers from opening in the area and driving others away.

Tromans explains: “We were tempted by the prospect of retail expansion that hasn’t happened. It’s had a big effect on everything. The bigger shops that might have come into the town don’t want to commit and there’s been stagnation.”

But many argue that even when Summer Row does finally come it is unlikely to have an immediate effect. Besides, for shoppers and retailers stuck in the present gloom, talk of a new centre opening some years down the line means very little. For many, like Wolverhampton-born retailer Roger Sexty who owns Rowfers, a chain of alternative clothing shops in the West Midlands and Manchester, the city needs action now, not more space in the future.

“We’ve been here for years but it’s getting to the point where it’s not worth being here anymore,” he says. “Everybody’s struggling and lots of people around here are going bankrupt. I have no confidence in the council acting in the right way. All they want to do is develop in another area of town. It’ll take away what little footfall there is. Independent retailers don’t stand a chance.”

So what can be done to save struggling cities like Wolverhampton? The harsh nature of the free market is that when shopping spend is down there is very little any retailer, developer or local authority can do to bring it back.

There are initiatives around the UK to support the high streets that vary from reducing parking charges in key shopping areas to, as is the case in Wolverhampton, filling empty units with features like temporary displays and short-term tenants such as art galleries and legal drop-in centres.

One of the people most closely linked to this scheme in Wolverhampton is Wolverhampton City Centre Company manager Kim Gilmour. She has worked with the city’s council project-managing a grant of £52,632 - which has also been allocated for a further 106 struggling towns and cities - to roll out the temporary store uses.

“The retailers really welcome this initiative because it makes the high street look more lived in,” she says. “It looks like something is going on even if it isn’t”.

But Gilmour concedes that while the grant is one way of delivering a useful boost to the atmosphere of the city, it hasn’t allowed Wolverhampton City Centre Company or the council to go as far as they need to.

She adds: “There hasn’t been a large amount of investment in the last few years and I do think we’ve lagged behind. Some areas of the city are looking quite derelict. We’re not really seeing any national retailers investing, it’s more independents. I think it’s going to be a slow recovery.”

This is a sentiment echoed by Wolverhampton Development Company (WDC) chief executive Stephen Catchpole. Among the WDC’s remit is to find a solution to the Summer Row problem, and while Catchpole welcomes the council’s use of empty shops in the city, he accepts that until the investment from Multi is secure, real confidence is not going to return to Wolverhampton.

He explains: “The harsh facts are that we are only emerging from a recession in a technical sense. We are going for some quick wins by improving the environment of the city, but Summer Row will really bring back confidence in the short term and benefits in the long term.”

The outlook for towns and cities like Wolverhampton is tough and even now that the UK is out of recession, this won’t make much difference to the town’s fortunes. Retail - particularly in second-tier cities - has borne the heat of the present downturn and where this has led to huge numbers of closures, as has been the case in Wolverhampton, the whole city has suffered.

While there are efforts in place to bring more hope to business, often these appear to be the “quick wins” that Catchpole describes. If small retailers such as Rowfers are still going to have a presence in cities like Wolverhampton in a year’s time there needs to be more support from local authorities and great financial investment from central government than £52,632 grants.

If this doesn’t happen soon, the next 12 months of decline could be even more severe than the last.