1 in 5 UK shops to disappear by 2018

July 30, 2016

By GlobalPost WriterKiran Moodley, CNBC

Shoppers carry their purchases as they walk along Oxford Street in central London on April 25, 2013.
Andrew Cowie

The UK will have the highest online retail sales of any country in terms of share by 2018 as a greater number of shoppers shun the main street, forcing the closure of 1 in 5 shops over the next five years.

In a report by the Centre for Retail Research (CRR) detailing the probable retail landscape in 2018 the percentage of customers shopping online will increase from 12.7 percent today to 21.5 percent in five years' time, the highest percentage in the world.

This in line with current retail trends: the share of consumer spending on the "high street" (the main shopping street in UK towns and cities) has fallen from 50 percent in 2000 to a predicted 40.2 percent by 2014.

As shoppers increasingly stay at home to do their shopping, stores across the country will continue to shut down. By 2018, store numbers will fall by 22 percent, a loss of over 60,000 stores in five years, forcing some 316,000 jobs to be lost.

According to the report, while consumer spending has increased by 12 percent since 2006, retail operating costs have risen by 20 percent, off-setting any benefits from increased consumer activity.

With so many transactions taking place online, the CRR says that high street stores with strong web offerings will only need to have only 70 stores in the UK to ensure a national presence compared to the 250 they required in the mid-2000s.

Director of CRR Professor Joshua Bamfield wrote: "Customers now shop in multiple ways, checking a store's website, visiting stores, reading reviews and making online price comparisons with smart phones whilst shopping. Retailers have to make clear and strategic responses to the changing pattern of how consumers shop which includes tactical decisions about store numbers and locations."

Bad News for "Portas Pilots"

The report comes after research by the BBC found that a government-funded project to save the "high street" in 12 UK towns was struggling.

Mary Portas, a celebrity retail guru, was given 1.2 million pounds ($1.8 million) by the government's High Street Innovation Fund to halt the decline in stores in 12 "high streets" in the UK According to the BBC, in ten of the 12 towns more units closed than opened in the past year.

It is not just the High Street that will be affected: the CRR says that neighborhood stores will fall by 26.2 percent over five years, a loss of 34,587 shops, as retailers pull out of small localities and focus on retail parks and internet shopping.

Even large companies like Tesco, Wickes, ASDA and B&Q will be hit by the shifting retail landscape, with many already announcing reductions in the opening of large new stores.

The CRR says that while London, the South East, Birmingham, Leicester, Manchester and Glasgow would do well, it was Wales, the North and the Midlands that would see the highest share of closed stores.

The Future of the UK High Street

The CRR says that the media attention generated by the celebrity Mary Portas should be backed up by more investment from the government. The CRR says an investment of 320 million pounds ($480 million) needs to be used to completely overhaul the orientation of the UK's "high streets".

Rather than reopening retail spaces, the CRR says empty shops should become residential accommodation, doctor's surgeries, classrooms, meeting rooms and other facilities to ensure local participation. The CRR predicts that up to 20,000 new homes could be created in UK town centers.