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Our views 16 July 2019

Retail therapy

By Martin Foden, Head of Credit Research

5 min read

Everyone knows that traditional ‘high street’ retailers are struggling. Barely a week passes without another company going into receivership or announcing store closures: House of Fraser, Thomas Cook, New Look, Boots… even Poundworld couldn’t buck the trend.

And the headlines will keep rolling. Debenhams and Arcadia (whose brands include Burton, Dorothy Perkins, Miss Selfridge and Topshop) are trying to shore up their businesses. Even John Lewis, which appeared to defy gravity for years boosted by its ever-more heart-tugging Christmas ads, is retreating. It announced in March that staff would receive just a 3% bonus, the lowest since 1953, due to difficult trading conditions.

The causes are myriad. Retail is inherently economically sensitive, but there are also more prosaic challenges, such as high business rates and distorting tax rates. These are interwoven with powerful secular dynamics, including increased online penetration and changing consumer behaviour.

Read Retail therapy full article