Decline in applications to open new shops

London may be privy to the most expensive retail markets in the world, however the number of applications to develop new retail stores has fallen 9 percent in the past year to 6,700, from 7,360, reveals research by EMW, the commercial law firm.

The decline in applications has been a steady fall since 2008, having fallen by 44 percent from 11,900 application prior to the financial recession.

As omni channel retailing, online stores and m-commerce are forging new territories in retailing, many high street brands have lost out to those who embraced the digital landscape and found new customers.

EMW says that, despite traditional retailers increasingly focusing on and expanding their online services, many are often still failing to compete effectively with online retailers, such as Asos and Boohoo. The company notes that the recent failures of traditional retailers BHS, Austin Reed, and Morrisons' convenience store chain, My Local, were in part caused by the continued success of online-only brands.

"Retailers have less appetite to open new shops"

Aimee Barrable, Principal at EMW, comments: "With online retailers continuing to win market share, high street firms have less of an appetite to open new shops, instead opting to develop online services or squeeze extra profits from existing space by changing the shopping experience or re-purposing stores to act more as showrooms or collection points."

"Recent high profile closures will lead to more retail space becoming available on the market. Those retailers still looking to expand their high street presence might look to acquire some of these recently vacated stores instead of applying for any new retail developments. Also, it may be that many retailers wait before committing to any new shop developments until they have a clearer picture of the economy in the aftermath of the Brexit vote."

"In shifting focus away from high street stores towards digital offerings, retailers are continuing to adapt to changing consumer habits as they move even more towards online shopping and home deliveries. It seems that on-line retailers and those who are more successful at building a complementary online presence make their digital offering a major part of their business model; they see it as key to their success. As a result, more traditional "bricks and mortar" retailers are now putting even greater effort into their online presence instead of looking to expand their property portfolio."

"Austin Reed, another casualty of the changes in the market, was said to have failed to appeal to younger shoppers and to address the fact that technology has made male shoppers more aware of the range of fashionable alternatives. Often, it's the quality of a company's digital offerings that matter most in remaining competitive."

Affordability is another factor, as the UK and London in particularly command some of the highest retail rates in the world. London's New Bond Street charges the second highest retail rents in Europe, which at nearly 13,000 euros per square meter per year only luxury brands can afford. It comes in a close second after Paris' Champs Élysées, the most expensive retail location in Europe, with rents at 13,255 euros per square meter per year.

Credits: Photo, Google; Source, EMW