Despite predicted growth in the fashion retail sector of £7.9bn by 2015, the UK is set to lose almost 4,000 stores from its high streets, according to a study by retail analyst Conlumino, commissioned by online rewards and promotions firm, Webloyalty.
Researchers found the erosion of growth by online 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, claim researchers. In contrast, the cost of running physical stores is forecast to rise by 10.2% over the same period.
It is inevitable such a differential between costs and sales increases will make some space uneconomic, said researchers. As a consequence, it is likely the UK will continue to see a reduction in fashion store numbers and fashion retail space over the next few years.
The research forecasts in order to maintain profitability, around 3,900 individual fashion shops will close by 2015 with a loss of 6.6m square feet of selling space. This is a decrease from 111,654,000sq ft in 2011 to 105,009,000sq ft by 2015 as retailers reassess how much space they need to drive sales going forward.
Neil Saunders, managing director at Conlumino, said: “Buying fashion today is a much more complex process than it was in the recent past. Fashion stores are becoming polarised into those that act as points of contact or for functional purposes; and those that add significant value, are more experiential and act as brand enhancers.”
Guy Chiswick, managing director of Webloyalty, said: “We must not allow the loss of physical retail space to overshadow the strong predicted growth of the fashion sector. For the first time ever online will take the lion’s share of overall growth. This means retailers must readdress their business models to ensure that online, mobile and social media channels all play a role in driving revenue.”