Even if disposable income increases to the levels previously seen, it will be in the pockets of the younger generations.
But its not looking like increasing for the foreseeable future. And that's why small retailers can't get business loans from the bank to see them over, and large retailers are really struggling to get anyone to invest.
Would you hand out a loan to a small retail shop selling the usual fare given the current market conditions and what any business plan could allow for over the next 5 years?
Not even the big boys can now easily get them.
But there is always Brexit to give everything a boost...................................!!
I think if you could show a viable plan, even if it was going to take more than 5yrs, you'd get a bank to back you if the plan was sound.
But this one looks set for a generation. And one day, online might become viable for everyday (non grocery) shopping for everything. But I suspect only when walk-in shops are no more, and when they can charge proper postage (both ways) and a return fee (which needs a law change, but that will happen).
Bro was able to pre-empt all this - its been on the cards for well over a decade - by buying all the freeholds to his, which keeps greedy landlords at bay.
But that means huge amounts of capital are tied up in bricks and mortar, not being invested in trading requirements. It also means any retail business that does also has to take the full costs of maintaining those buildings, which can be avoided if a sound lease is negotiated properly.
Many retail companies, including the one I was part of for 28 years had in excess of 1,000 units, and like most in our field decided to sell all free holds to recoup the capital and re-invest it in our core business, which like most in the major retail field, is not running a property empire.
That extra boost of funds gave the means to acquire other retail companies, as well as constantly updating our street presence. It also meant that when a store became non-viable, at the end of the lease, we walked away without costs apart from stripping the unit. That means the company has flexibility to act quickly when necessary. In addition it also results in a freedom away from the property game whereby commercial property can depreciate with the local area and market forces. One reason why landlords are, albeit temporarily, agreeing to reduced rents, is that they know how their property will devalue with so many huge stores going onto the market together. There will also be tax implications on capital gains when, or if, you can sell. Even small units are going down in value as so many are empty, on the market together, often in now poor locations. That is why charity shops have been taking them on, but even then they cannot make them pay. Demolition of the surplus shops will release valuable land, but that redevelopment is costly and usually a game for the major developers, who may reap the rewards in due course.
However, owning or not your bricks and mortar does not change the business rates you pay, does not increase customer footfall, or assist your offer to customers. It does not tackle the underlying reasons for sales decline, which are now numerous and, for many, proving to be over whelming.
Online businesses have none of those difficulties that apply to bricks and mortar units. They can be totally flexible to meet trading conditions, and of course are not paying currently those high business rates. A different retail game altogether, which will grow and business plans are reflecting that, and with low start up costs to boot, it is far easier to get big fast.
The traditional retailer currently is now having to face business plans that have to predict lower footfall, higher costs, less complimentary traders around them, and higher product prices as their buying power declines, with suppliers more likely to work on attracting traders who are growing and with a brighter, financial, trading future. It is all going one way, and will in our lifetimes.