High street malaise
Plus, UK data centres classified as critical national infrastructure, Starbucks' new CEO lays out turnaround plans, is ‘founder mode’ or ‘manager mode’ better and why Britain stopped buying mobile phones
(Image: Matthew Lloyd/Getty Images)
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By Sarah Vizard
British high streets have been hit by a wave of closures of pharmacies, pubs and banks in the first six months of the year. A total of 6,945 stores have closed so far in 2024 – equivalent to 38 a day, according to research by the accountancy firm PwC.
Considering new store openings, there was a net closure of 12 stores a day, higher than the average of 11 a day in 2023. But the data shows that on average 18 chemists, 16 pubs and nine banks shut every week between January and June, accounting for half the closures, with only three convenience stores and one cafe chain opening in their place.
That has led to almost 2,300 more empty stores on high streets, shopping centres and retail parks.
The research highlights the shifts happening on the UK’s high streets. UK banks have been closing branches for several years as customers switch to digital banking, while both Lloyds Pharmacy and Boots have been withdrawing from the high street this year. Pub chains including Wetherspoons and Stonegate have also been closing sites.
It also reflects a shift in how people want to shop. Kien Tan, a senior retail advisor at PwC, says high streets are being hit by a combination of more people working from home and a rise in online shopping. “Since the pandemic it has got harder to get into town and easier to get to retail parks,” Tan says.
PwC suggests that some stability is returning to the retail sector, with a similar number of net closures over the past three years. The net decline is around the 1 per cent mark, suggesting a slow but steady decline in physical outlets.
There was better news for fashion retailers, with an extra 94 empty in the first half of the year, compared with 273 a year before.
That comes as the John Lewis Partnership reports a narrowing of its losses and an increase in half-year sales. Losses before tax fell to £30m in the six months to July 27, compared to £59m a year earlier, while group sales increased 2 per cent to £5.2bn.
Chief executive Nish Kankiwala says the results show “our transformation plan is working” and that it expects profits to “grow significantly” for the full year. That comes after three years of losses and no staff bonus as the company invests in modernising its shops and digitally transforming its business.
Sales at its John Lewis department stores were down 3 per cent over the first half of the year, while Waitrose sales rose 5 per cent. The company has said the outlook for consumer spending remains uncertain.
John Lewis is one of a number of retailers that has closed stores in recent years, but says it has no plans to go any further. Its strategy for boosting sales includes the return of its “never knowingly undersold” price pledge last week, as well as tie-ups with other retailers, including plans to open a Waterstones concession in its Oxford Street store in London.
You can read the full report on the health of the high street here.
Business Agenda
A summary of the most important business news
1. Growing speculation about a capital gains tax raid in October’s budget appears to have prompted a surge in the number of larger homes being put up for sale, according to Rightmove. The property website says that in the week ending September 9 there was “a flurry of activity at the top end” of the market. The number of larger homes – defined as four-bedroom detached houses and all five-bedroom and larger properties – listed for sale in Great Britain was 15 per cent higher than in the same period last year. You can read more here.
2. Data centres in the UK are to be classified as critical national infrastructure, joining the emergency services, finance, and healthcare systems, as well as energy and water supplies. It means they would get extra government support during a major incident, such as a cyberattack, IT outage or extreme weather, to minimise disruption. You can read more here.
3. Tata Steel has warned that up to 2,800 jobs are at risk from the closure of its two blast furnaces at its site in Port Talbot despite the government promising to provide £500m of support to the steelworks. Those made redundant will receive better terms under an “improved” deal between Tata and the government, which amends an agreement made by the previous Conservative administration. You can read more here.
4. Starbucks’ new CEO has laid out his plans to turn around the struggling coffee brand. After becoming the fourth CEO in two years, Brian Niccol says his initial attention will be devoted to fixing problems in its US stores as it makes up the bulk of its global profits. You can read about his other plans here.
5. Caroline Ellison has urged a federal judge not to send her to jail after she helped prosecutors win a jail sentence for her former boyfriend and founder of cryptocurrency exchange FTX, Sam Bankman-Fried. Ellison has pleaded guilty over her role in the multibillion-dollar collapse of the company. Customers of FTX and Alameda Research, its sister company where she was chief executive, were defrauded out of an estimated $8bn. You can read more here. Michael Lewis has written a brilliant book about the rise and fall of Sam Bankman-Fried called Going Infinite if you want a detailed dissection of the story.
Business Question
Guess the year
- The Great Train Robbery takes place in Buckinghamshire
- McLaren, Pukka Pies and Toni & Guy were founded
- Economic growth for the year reaches a post-war high of 7.5 per cent
- Andy Street, Malcolm Gladwell, Jo Malone and George Michael are born
- The Beatles release their debut album, Please Please Me
The answer can be found at the bottom of the page.
Business Thinker
Deep dives on business and leadership
By Dougal Shaw
🤔 Is ‘founder mode’ or ‘manager mode’ better?
It’s a question we’ve asked before at Business Leader. Do companies perform differently, perhaps more dynamically, when the original founder is in charge, rather than a ‘professional CEO’ who is drafted in? Paul Graham, a co-founder of the Y Combinator start-up accelerator, started a debate about this in a recent essay. He thinks ‘founder mode’ is superior. Fortune magazine has done a quick audit of its Fortune 500 to try and figure out if he’s right.
🎢 M&S recovery has momentum: will it stick?
Marks & Spencer is one of the best-known retail brands in the UK, its shops a well-known staple of our high streets. An iconic brand for many Brits, it seemed to be in steady (even terminal?) decline from 2015 until the depths of Covid. But recently its fortunes, including its share price, have been on the rise. It’s partly down to its changing customer offer, but some external factors are helping too.
📱 Why Britain stopped buying mobile phones
As Apple prepares to launch the iPhone 16, I was reminded about this insightful article from The Telegraph last month. It makes a counter-intuitive point: while we live in a society increasingly obsessed with our mobile phones and the endless digital content they serve up, sales of mobile phones in the UK have been in decline for many years. Handset sales dropped by around 20 per cent last year for some of the big UK networks. But the trend is more long-term than that, the article points out. Mobile phone sales in the UK stood at 29.7 million units in 2013, a decade later that fell to just 13.4 million, according to estimates from CCS Insight. The problems are a lack of innovation in phones and the fact that people are keeping them for longer. I have an iPhone 6 as a backup phone that works perfectly well, so I’m not surprised!
Business Quote
Inspiration from leaders
“The price of inaction is far greater than the cost of a mistake.”
– Meg Whitman
Business Leader
The best of our content
The biggest challenge Britain faces is keeping its success stories here
The UK stock market is losing its appeal as more British companies opt for private equity deals or move overseas. With the number of companies listed on the London Stock Exchange in steady decline, British stocks are perceived as undervalued, prompting business leaders to explore other markets.
Amid the challenges of fundraising and regulatory burdens, there is a growing concern over how the UK can retain its most promising firms and reverse the trend of delistings. Our economics expert Szu Ping Chan breaks down the state of play and explains why we need to show these promising scale-up companies a little more love.
You can read the article here.
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👑 Lewis Raymond Taylor’s journey from prison sentences to building a successful coaching empire
And finally…
Lee Carsley has had the ultimate job interview this week: two football matches to show whether he should be the next England manager. The matches went well – 2-0 victories and strong performances against Ireland and Finland, albeit two lowly-ranked opponents.
The Times has published an interesting analysis of Carsley’s approach, including how he focuses on the strength of players, not their weaknesses, when building the team. That approach has come up a lot in recent episodes of the Business Leader Podcast. Chris Oglesby of Bruntwood, for instance, advocated building a business around the strengths of people and accepting that their weaknesses were part of that strength.
Ian Graham’s new book How to Win the Premier League spoke of how Jurgen Klopp looked for “extreme characteristics” in players. “If and when those game-changers had weaknesses, he was willing to use other players to compensate for them,” Graham wrote.
You can read The Times piece here.
The answer to today’s Business Question is 1963.
