6 minute read
NACFB: Breaking the chain
Breaking the chain
Seeding fertile ground on the UK’s high streets
Subtitle
Norman Chambers Managing Director NACFB
This is not another article about the decline of the UK high street. They are ten a penny, cliché-ridden and can be relentlessly bleak to read. Instead, this is part-missive, part-love letter, and part-manifesto that champions the UK high street, recognising its place within our national psyche and celebrating the continued role it plays in sustaining small businesses.
No more nails
The mid-sized market town of Bromsgrove in Worcestershire is, in many senses, unremarkable. Its relatively humble history is built upon the cloth, wrought iron, and nail production industries. More recently, a significant proportion of residents have plied their trade in the automotive sector, with the town among the worst impacted by the collapse of MG Rover in 2005.
Running through the heart of the town is its high street. At the time of the Rover collapse it was a thriving and bustling – if indistinct – commercial corridor; lined with all manner of familiar frontages. Woolworths, Mothercare, WH Smith, Blockbuster Video, Burton Menswear, Dorothy Perkins, and New Look. Whilst these chain stores brought with them increased footfall and relative choice, independent business were squeezed out through a combination of rising rents and an inability to price match.
The last ten years have seen many of the familiar chain stores withdraw from provincial and inner-city high streets, as they themselves battled rising e-commerce giants and changes in consumer shopping habits. In truth, it’s hard to be nostalgic in their wake for, whilst they employed local people, the profits they turned were never spent in the locale.
Today, Bromsgrove’s high street shows no sign of its nail-making heritage, but there are two independent nail bars, lining fingers with fresh colour and acrylics. The old Our Price record store is now a popular independent coffee shop, and even the Post Office has been converted into a quirky public house. Slowly, long dormant and empty units are being reclaimed, Bromsgrove’s high street is reinventing itself, marking a slow but steady return to its original market town heritage.
Although patchy, this quiet revolution is in the process of happening in towns and villages across the country, and with the right backing and shared expertise of the NACFB’s Members, this fertile ground for SMEs can begin to flourish once more.
Lifting the shutters
We are living through a critical moment for the nation’s high streets. The rise of out-of-town shopping centres, the growth of online retail, and the problems caused by social distancing are significant factors impacting their ability to thrive. But the pandemic has also presented an opportunity to rebuild in a new way. We all bore witness to a resurgence of community spirit, a renewed connection with local areas, and a growing recognition that communities need to play a central role in shaping their town centres and high streets to meet each neighbourhood’s needs. As such, the aftermath of the pandemic is an important moment to reflect on established practices.
We emerge into an environment that only recently was seeing nearly 50 chain stores a day close. According to the Local Data Company (LDC) on behalf of accountancy firm PwC, city centres have suffered the worst, while retail parks are faring marginally better. The LDC tracked more than 200,000 stores operated by businesses with more than five outlets across the UK. These include everything from retail and restaurants, to cafes, banks, and gyms. Although 3,488 stores opened in the first six months of 2021 the number of closures was far greater. A total of 8,739 shops shut creating a net decline of 5,251 outlets – a huge number, but 750 less than in 2020.
Just like in Bromsgrove, the removal of chain stores from the high street equation leaves a void, waiting to be filled by incumbent business owners, enticed by cheaper commercial rents. More and more independent retailers and food outlets are stepping into the gaps left by chains, driving the first rise in their numbers in four years. LDC’s data reveals a net total of 804 locally run convenience stores, barbers, bakers, cafes, and fast-food joints opened in the first half of 2021, bucking the trend of their chain counterparts. Independent business owners have benefited from government support measures, such as business rates relief, which have enabled them to remain open and capitalise on cheaper rent deals from landlords as their bigger rivals stumbled. Perhaps most tellingly, approximately half the Topshop stores relet since the fashion chain exited the high street a year ago have gone to independent operators.
Community impact lending
Another clear trend has been both the emergence and rise of community businesses. A community business is set up and run by the community in a particular place, to address local challenges and deliver positive impact. Any profits generated are reinvested locally. Community businesses, as defined by charitable trust Power to
Change, have four key characteristics: they are locally rooted; they are accountable to the local community; they trade for the benefit of the local community; and they have a broad community impact. The number of community businesses has been growing, with many in high street locations.
Power to Change’s 2021 Community Business Market Report revealed that the median total annual income of community businesses increased to £130,000 last year – an increase of some £20,000. The report also showed that these businesses had responded well to the pandemic by evolving their services to meet their community’s needs: three-quarters (76%) now offer more than one service to their community – a rise of 13%.
Community businesses make positive impacts in their community and exist to help make places better, but they still require funding. The NACFB has seen several prominent lenders develop social impact arms or, indeed, a growing cohort of dedicated community impact lenders.
The pandemic caused a marked increase in demand for the services of community businesses, particularly for those providing wellbeing services. Three quarters (75%) of community businesses offering food provision saw demand rise: 80% saw a rise in demand for their financial advice, 78% for their health and social care services and 88% for mental health support. Two-thirds (66%) of community businesses now expect to develop new partnerships or collaborations in the coming year to deliver goods and services and the potential to tie-up with other likeminded local enterprises presents myriad opportunities.
Benefiting everyone
There are thousands of high streets like Bromsgrove’s in the UK. To preserve the Great British high street for future generations, landlords, tenants, and lenders may need to share the risk and reward of being on the high street together, with rent tied to business performance, alongside credit scoring using new data sets and analytics to track and forecast returns for everyone.
Innovation can boom as we enter a new era of connected commerce and communities full of enabling technologies that improve the high street customer experience or the performance of businesses trading on it. Plans must be put in place to empower each high street to embrace dynamic and data-driven plans with the optimal mix of retail, residential, and other commercial uses to sustain productivity over time. This must include the repurposing of units, greater flexibility built into lease agreements, an evolution of planning laws, and greater support from local authorities.
A thriving high street benefits everyone. The gaps left by national chains reducing their footprint or disappearing altogether must be filled by new start-ups, local independents, and growing brands. Carefully positioning these enterprises in the right locations to address unmet consumer needs and proactively supporting through targeted growth financing – via NACFB Members – can help them achieve their potential. Perhaps, in time, we shall be witnessing the high street’s Renaissance as historic market towns, like Bromsgrove, across the UK once again welcome residents to a central commercial hub.
