The dominance of retail on high streets is something of the past. Whilst shopping will still be a key feature, there is greater demand and opportunity for restaurants and leisure activities, as well as for more public services, such as health centres and libraries, in town centres, points out a recent report by House of Lords.
The Built Environment Committee's report, "High Streets: Life beyond retail?", published today (28), sets out how high streets can be regenerated and become more resilient, emphasising that retail will remain vital but must be part of a broader mix including leisure, services and community spaces.
The committee found that local authorities often lack adequate resources and skills to support high streets, recommending investment in training town centre managers and highlighting the need for greater coordination between Government departments.
The report states that what communities want and what can be sustained on the high street is constantly evolving, so a fixed vision and monolithic approach to their future should be avoided. Local authorities, communities and businesses need to work together to shape high streets that are reflective of local conditions, adaptable, and resilient.
High streets will only thrive if people can get to them easily and safely. Access by car and sufficient parking are necessary for commercial sustainability, though their adverse consequences can be mitigated by better public transport connectivity, particularly through improved bus networks, states the report.
As retail occupancy declines and leaves behind vacant units, cafés and restaurants have taken their place. There has also been a rise in the number of charity shops, which benefit from substantial business rates relief and often have lower staff costs, making them more able to afford high street rents. Public authorities are also tentatively moving public-facing services (such as surgeries and libraries) on to high streets. This can both improve access to those civic functions and increase footfall to sustain local businesses, states the report.
Leading trade association British Independent Retailers Association (Bira) has welcomed a major new report from the House of Lords that calls for empowered local leadership and simplified funding to help revive Britain's high streets.
"People, particularly young people, value having space to socialise and spend time without spending money on the high street. They also value green spaces on or near the high street. More green space and an improved public realm should be a key consideration in proposed regeneration programmes.
"Local authorities and the Government create the structures for high street renewal. The planning system, taxation and funding can all impact the success or failure of projects to revive local places. But, the previous Government's plans to revive high streets were not well co-ordinated.
"The new Government's local growth funding reforms must ensure that high streets are enabled to flourish in the long term, and that those responsible for their future have enough expertise to deliver improvements. The Government should recognise that local authority bidding for central funding has become expensive and wasteful and should consider replacing that approach with a transparent system of funding distribution that commands greater confidence," states the report.
Commenting on the report, Andrew Goodacre, CEO of Bira, which represents 6,000 independent retailers across the UK, said, "This report has identified some of the key elements to a successful high street, whilst recognising that each place needs to find its identity and solution to create a vibrant high street.
"For some time Bira has been saying that retail is no longer the dominant feature of high streets, with consumers looking for more services and leisure opportunities. We also agree with the conclusion that high streets need diversity and adaptability, - characteristics often delivered by independent retailers and independent business in general.
"It is also good to see recognition of the need for good accessibility by investing in infrastructure where possible and highlighting the importance of good car parking.
"Finally, we absolutely support the idea of local business leaders and local communities being involved with future plans to regenerate a place. Funding can also then be devolved to a local level, supporting coherent plans. Independent retailer care about their high street and the their communities, and all too often their voice can be ignored," he added.
The report urges the Government to provide local authorities with more targeted support and calls for a radical simplification of the current funding landscape, which it describes as "patchy and uncoordinated."
It also emphasises the importance of providing resource funding alongside capital investment to ensure sustainable regeneration.
The majority of UK households are heading into 2025 feeling financially secure, but more people think the health of the economy is worsening than improving, a recent report has shown.According to KPMG UK’s Consumer Pulse survey, nearly three times more people feel secure (fifty-seven percent) than insecure (twenty-one percent) about their financial situation.
While the picture for financial security is largely positive, consumer opinion regarding the health of the UK economy was more mixed – with four in ten consumers saying the economy is worsening, compared to a quarter saying it’s improving.
Pessimism about the UK economy is highest among two-thirds of those aged sixty-five and over, with those aged 25-34 the most optimistic. Regionally, London is the most upbeat, with the North East the most downbeat about the economy.
A wage rise would be the most likely reason to increase an individual’s spending beyond 2024’s levels.
A third of consumers say that retailer promotional events could convince them to part with more money during the course of the year, with a quarter saying improved loyalty scheme prices would.
Reflecting upon the findings, Linda Ellett, head of consumer, retail and leisure for KPMG UK, said, “Whether due to confidence in their ability to spend or their ability to manage household bills, it is positive news that the majority of UK households are heading into 2025 feeling financially secure.
“Despite four in ten people saying the UK economy is worsening, a higher amount than those thinking it is improving, planned spending on big ticket items over the next twelve months looks healthy. Whether that spend comes to fruition will depend on a range of factors, including continued reduction in interest rates and whether perception about economic worsening becomes a reality in the form of increased job insecurity.”
Comparing their spending in the last three months (Sept, Oct, Nov) to the previous (June, July, Aug), groceries was the number one category for those spending more money while eating out was the activity consumers most commonly spent less money on.
A quarter of consumers reported buying promotional or discounted items more over the last three months, while half of consumers said they bought big ticket items – most commonly on a holiday, followed by household appliances.
Price was the top purchasing driver for both everyday purchases and one-off higher cost items.
Ellett added, “Promotional periods and the value consumers place on loyalty pricing throughout the year have all demonstrated that shoppers remain savvy when it comes to searching out better deals.
"This will continue in 2025 and our research shows that up to a third of consumers may increase their overall spending levels if retailer offers are sufficiently appealing to them.
"Retailers will be looking to capitalise on this by using customer data and AI to ensure offer targeting is increasingly personalised in the coming twelve months.”
Nearly half (46 per cent) of Brits prioritised spending on small, affordable, mood-boosting luxuries such as pastries and cosmetics in 2024 though most shoppers were bothered by "double-dip" shrinkflation majorly seen in snacks and chocolates, states a recent industry report, charting out top 10 trends that shaped consumer behaviour last year.
New data from Barclays reveals that essential spending grew just 0.9 per cent in 2024, down from 3.9 per cent last year, as spending on fuel fell while supermarket growth slowed.
The Barclays Consumer Spend report, which combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending, reveals the top 10 trends that shaped consumer behaviour this year.
'Spendanova' for experience-loving Brits
Brits prioritised spending on memorable experiences in 2024, with the entertainment sector enjoying a 5.8 per cent uplift. Those who spent on entertainment in 2024 each spent £343 on average.
Spending on live shows and concerts increased 6.7 per cent thanks to ticket sales and attendance at major musical events such as The Eras Tour, Sabrina Carpenter, Coldplay World Tour, and Oasis’s reunion.
Treatonomics and the ‘lipstick effect’
Cutbacks continued for countless consumers, but many adopted a “treat yourself” attitude in 2024. Nearly half (46 per cent) of Brits say they prioritise spending on small, affordable, mood-boosting luxuries such as pastries and cosmetics, even while tightening budgets.
Among this group, baked goods were a particularly popular ‘pick-me-up’, chosen by 43 per cent at an average monthly spend of £22 each, with crookies and pistachio desserts among the year’s top trending treats.
Demand for little luxuries also boosted pharmacy, health and beauty retailers, up 7.1 per cent, further demonstrating the impact of the "lipstick effect", where shoppers prioritise cosmetics purchases, even when limited spending. ‘Beauty spenders’ splashed out £291 each on average in 2024.
Double-dip shrinkflation
Shrinkflation emerged as one of supermarket shoppers’ top scourges in 2023, while this year saw ‘double-dip’ shrinkflation bite. Two thirds (64 per cent) of cost-conscious Brits noticed ‘double-dip’ shrinkflation in 2024, where products go through two or more rounds of size reductions without a corresponding drop in price.
According to this group, the five most cited products hit by ‘double-dip shrinkflation’ were chocolate (54 per cent), crisps (39 per cent), packs of biscuits (34 per cent), snack bars (32 per cent) and sweets (32 per cent).
Brits find creative ways to save
Consumer confidence in household finances showed tentative signs of recovery this year, reaching an average of 69 per cent, up from 64 per cent on average in 2023. Brits took control over their finances and embraced new ways to save; almost a quarter (23 per cent) say they have participated in or would consider participating in a “no-spend” challenge, which involves refraining from making non-essential purchases, such as takeaways, coffees and clothes.
Almost half (45 per cent) said they were cooking more at home to save money, while setting clearly defined spending goals (such as saving for a holiday or building an emergency fund) and planning expenses in advance also proved to be popular.
Television thrives
Demand for digital content soared in 2024, emerging as the year’s strongest performing category, up 13.2 per cent – nearly twice the 7.3 per cent increase seen in 2023.
“Streamflation”, the rising price of streaming subscriptions, also took effect; 59 % of Brits expressed concern about their digital subscriptions becoming more costly. Despite this, only 27% of those cutting down their discretionary spending said that they would reduce their spending on the category.
Brits continue to pull up a bar stool
Brits continued to flock to bars, pubs and clubs in 2024, as the sector recorded a modest 3.6 per cent year-on-year increase, fuelled by a summer of sport and a desire for festive socialising, with Brits that ventured to the pub spending £344 on average each throughout 2024. Growth at pubs outperformed restaurants in 2024, which were up just 1.7% in comparison, suggesting Brits opted for more casual, relaxed socialising in the last year.
Grocery Slowdown
Growth in supermarket spending slowed to 1.3 per cent, down from 6.5 per cent in 2023.
In a year of determined budgeting, cost-conscious shoppers continued to look out for loyalty scheme discounts and supermarket deals. Encouragingly, Barclays Consumer Confidence data found over a third (36 per cent) of shoppers have noticed food prices rising at a slower rate in recent months.
Easing pressure on household finances
There was welcome relief for households as concerns about inflation and the cost of energy bills both began to ease at the midway point of the year.
Brits take to the skies
Travel sector spending stayed strong in 2024, up 6.9 per cent, but lagged behind 2023, when growth reached 15.2 per cent. Holidaymakers spent £1,117 on average each on travel, and travel agents (7.9 per cent) and airlines (7.5 per cent) both saw significant uplifts in the period.
Homeowners choose sustainability over style
Spending on home improvements & DIY dropped -7.3 per cent year-on-year, while furniture stores also recorded a -2.2 per cent fall, indicating that Brits have been making fewer home décor purchases, instead favouring experience-led categories.
Whilst energy bills remained below 2023 levels, the energy price cap rise and colder weather kept home heating on the agenda. A quarter of homeowners reported making energy efficiency improvements to their home in 2024. Of those making changes, over half (52 per cent) are seeking to reduce long-term energy use and a fifth hope to increase the value of their property.
Karen Johnson, head of retail at Barclays, said, “2024 demonstrated Brits’ strong appetite for experiences very clearly, spending selectively elsewhere in order to find room in their budgets for the moments and treats that the most matter to them.
“From The Eras Tour to the much-anticipated Oasis reunion; blockbusters at the cinema to quality content on the couch; pastries to lipsticks and planning trips abroad, Brits collectively said ‘yes’ to joy in their spending, even against a backdrop of rising bills and living costs.
“This conscious consumerism will continue to shape spending in the new year, with entertainment likely to maintain its momentum, as Brits continue to embrace their ‘new essentials’.”
The UK's independent retail sector endured a grim 2024, with 11,341 store closures and 58,616 job losses, marking a significant increase compared to 2023, when 7,793 stores closed and 34,390 jobs were lost, according to the Centre for Retail Research.
This 45 per cent rise in store closures and a staggering 70 per cent jump in job losses highlight the growing challenges faced by smaller retailers, who have been disproportionately affected by economic pressures, rising costs, and intensifying competition. The sector's struggles contributed heavily to the overall retail closures and redundancies in 2024, which saw 13,479 stores shuttered and 169,395 jobs lost across the UK.
In contrast, the multiples sector, while also impacted, experienced a less dramatic year-on-year change. In 2024, multiples closed 2,138 stores and reported 74,784 job losses, compared to 2,701 closures and 45,428 job losses in 2023.
The figures paint a bleak picture for independent retail, which is often hailed as a cornerstone of local communities. Retailing jobs form a sizeable portion of the country’s overall job market, with 2.87 million roles representing about 8.5 per cent of all UK jobs, according to the most recent figures from the British Retail Consortium.
“The comparatively low [job loss] figures for 2023 now look like an anomaly, a pause for breath by many retailers after lockdowns if you like,” Professor Joshua Bamfield, director of the Centre for Retail Research, said.
“The problems of changed customer shopping habits, inflation, rising energy costs, rents and business rates have continued and forced many retailers to cut back even more strongly in 2024.”
Trade bodies have warned that small high street shops are likely to face significant challenges in 2025 due to tax hikes announced in the Autumn Budget, coupled with minimum wage changes. Businesses will see an increase in national insurance contributions and a reduction in business rate discounts next year.
The Centre for Retail Research forecasts 17,349 store closures in 2025, resulting in nearly 202,000 job losses.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020,” Bamfield warned.
Retailers across Britain have warned of potential price increases and store closures following a bleak Christmas trading period, as consumers grapple with relentless cost-of-living pressures.
Fresh data from Rendle Intelligence and Insights paints a challenging picture for UK retail in the lead-up to Christmas. Footfall in the final full week of trading was down by a significant 11.4 per cent compared to the same period last year.
“Super Saturday,” traditionally the year's busiest shopping day, offered little relief.
Footfall on the day was only 4.1 per cent higher than the previous Saturday and a mere 0.9 per cent higher than the equivalent day in 2023.
These lukewarm figures follow a Black Friday that saw a modest 5.5 per cent uplift in footfall year-on-year, as shoppers appeared to prioritise discounted deals over last-minute festive spending.
Diane Wehrle, CEO of Rendle, highlighted the stark reality, “The disappointing results, coinciding with news that the UK economy showed no growth between July and September, underscore the severe cost pressures faced by households amid prolonged high inflation.
“It appears this Christmas has been disastrous for retail, and a bad omen for 2025.”
Official data also showed that retail sales in the UK fell short of expectations in November despite shops starting to cut prices early as part of Black Friday discounting.
Sales volumes rose by a weaker-than-expected 0.2 per cent month-on-month in November, having fallen by 0.7 per cent in October, new data from the Office for National Statistics shows.
Early retail sales data for December showed little sign of improvement.
Meanwhile, retailers body British Retail Consortium (BRC) has also warned of “spending squeeze” in January 2025.
BRC-Opinium figures released on Monday (23) suggest that public confidence in the state of the economy nosedived in December, falling eight points to minus 27.
The public’s spending intentions, both in retail and beyond, dropped six points, with expectations of spending in nearly every retail category falling.
Helen Dickinson, the BRC’s chief executive, stated, "The weak spending intentions could pave the way for a challenging year for retailers, who face being buffeted by low consumer demand and £7 billion of new costs from the budget set to hit the industry in 2025.
“With sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs, closing stores and freezing recruitment.”
November’s sharp rise in inflation is expected to dampen festive spirits and restrict spending despite household’s being better off compared with last year, warned a recent report.
November marked a second consecutive month of faster price rises according to the latest figures from Asda’s Income Tracker published on Monday (23), with families across the UK continuing to face rising inflationary pressures.
The Consumer Price Index (CPI) accelerated to 2.6 per cent in November – up from 1.7 per cent in September and 2.3 per cent in October – driven by the transport sector and higher clothing and footwear prices.
CEBR, who produce the Income Tracker on behalf of Asda, has forecast that inflation is set to remain above the 2.0 per cent target in the coming months, with energy prices and wage growth responsible for driving further higher essential costs.
Despite inflationary pressures, household spending power continues to improve year-on-year. Average household disposable incomes grew by 10.5 per cent in November, marking six consecutive months of double-digit increases.
The average UK household was £23.74 per week better off in November compared to a year earlier and had £249 per week to spend after paying bills and essentials, providing some relief for families as they get ready for the big day.
Reacting to this month’s Income Tracker, Sam Miley, Managing Economist and Forecasting Lead at CEBR, said, “The Income Tracker saw a slowdown in growth in November, driven by accelerating inflation.
"That said, spending power has continued to increase, with the Tracker having exhibited double-digit growth for sixth consecutive months.
“Spending power amongst households has seen a gradual improvement throughout the year, which is welcomed ahead of the festive period.
"Nevertheless, consumer expenditure over Christmas is still expected to be held back relative to pre-pandemic levels amidst elevated inflation and the lingering effects of the cost-of-living crisis.”