A simple walk through an average UK town centre will show that times are tough for department stores. Many stand shuttered and empty. The volume of sales at department stores fell by 11% between January 2020 and January 2023, according to the Office for National Statistics, but the rot had set in long before the Covid crisis.
Debenhams, which was once the largest department store chain in the UK, closed its last high-street shops in May 2021. The same month also accounted for Jenners – ‘the Harrods of the North’ – in Edinburgh, along with other shops in the Frasers Group.
Even John Lewis, long the beacon of value-conscious middle-class aspiration, has been forced to contemplate selling a minority stake in the business, which would put an end to its much-admired 100% staff-ownership structure.
Why department stores matter
But why should anyone care about department stores? By definition, they sell almost everything under one roof – from haberdashery and kitchenware to hats and sofas – but online shops and specialist stores will often offer greater choice at a lower price.
One is that they matter to the streetscape. Many department stores maintained grand premises (Jenners occupied a grade-A listed building on Princes Street) and put on lavish seasonal displays that people travelled into towns to admire. When such stores stand empty and boarded up, they can make high streets look sad, shabby and uninviting. But that’s just one aspect.
“The closure of department stores in regional towns is, first, and most obviously, a blow that knocks out the two front teeth of a high street, leaving a gaping hole that few other retailers are brave enough to fill.”
So says Peter Cross, an independent retail consultant and a former customer experience director at John Lewis and Waitrose. He adds that department stores were the destination shops that people would always visit. When these are gone, towns lose an important focal point for shoppers. That makes life increasingly hard for other businesses and, ultimately, the town, which needs retail rates to help balance the books.
The government considered introducing an online sales tax to close the rates gap, but concluded in February 2022 that it would be “complex, distortive and would not raise sufficient revenue to fund the scale of business rate relief stakeholders have called for”. Instead, there will be a “generous” revaluation package in April that cuts total business rates paid by the retail sector by roughly 20% while increasing those of large distribution warehouses by 27%.
How high streets were brought low
The UK’s Covid lockdowns of 2020-21 were a fatal blow to many regional department stores, but the sector’s demise had been a long time in the making. The roots of its troubles can be traced back half a century.
The first blow actually seemed benign, if not a boon. From the early 1970s, local authorities encouraged the construction of out-of-town shopping centres that brought in additional business rates and enabled them to pedestrianise town centres. John Lewis, a stalwart of the high street under various local names since the 1930s, opened its first out-of-town store in 1972.
As more people bought their own car – 45% of UK households had one by 1975, according to the RAC – driving to out-of-town shopping centres became fashionable. But, as most routine shopping was done by women who tended not to be the driver in a household, the high street still reigned supreme. But that would change as vehicle ownership increased and more women became drivers. By 1981, for instance, 15% of UK households owned more than one vehicle.
By 2016, the year in which a third of households had two vehicles or more, out-of-town shopping centres with plentiful free parking and a wide range of stores had become particularly popular with young aspirational consumers with cash to splash.
In 2000, Ipsos Mori reported that the high street appealed most to the “traditional working classes”, while out-of-town centres were the place for more prestige-conscious and materialistic shoppers.
That might not have mattered for town-centre department stores, except that the purchasing power of their predominantly working-class clientele was shrinking. When Are You Being Served?, the sitcom set in the fictional department store Grace Brothers, was at the peak of its popularity in 1977, the median disposable household income in the UK was 10.3% lower than the mean average (a figure skewed upwards by the super-rich). By 2021, the difference had increased to 18%, indicating that the gap between rich and poor had widened significantly.
This factor explains why department stores at the top end of the market have been largely untouched by the carnage affecting the rest of the sector.
“They have a resolute focus on luxury and style, often with a singular view of the world and a customer base that’s largely immune to economic woes,” Cross notes.
He adds that high-end players such as Selfridges, Fortnum & Mason and Harvey Nichols have “generally flourished” in recent years, despite the pandemic. “All of this has clearly been far harder for regional department stores.”
Local and central governments fight back
The problems that come with the demise of regional high streets are not lost on the government. Its “Build back better high streets” campaign aims to enable the “evolution of high streets into thriving places to work, visit and live”.
But cash-strapped local authorities around the country will have to do most of the work to achieve such an outcome. So what can they do?
The picturesque spa town of Harrogate, North Yorkshire, lost its Debenhams in 2021, although it still has a department store left. This has gone through several hands over the years, but its current owner is Hoopers. The chain was established in 1982 – a time when planning authorities were approving out-of-town developments left, right and centre. Hoopers has four branches remaining, having left five other towns around England.
The challenge is clear to Richard Cooper, leader of Harrogate Borough Council. “We want to ensure that our high streets are prosperous in the future and we need to look at new ways of achieving that,” he says. “They need to be attractive and inviting, providing something you can’t get at home by looking on your laptop or smartphone.”
Knaresborough and Ripon are two towns in the borough that host weekly markets offering “unique and homemade produce”, he adds, and there’s a monthly farmers’ market in Harrogate itself.
“We’ve recently partnered with an artisan market that operates regularly in our picturesque Valley Gardens and also the grounds of historic Knaresborough Castle. Again, this provides something that’s unique and unobtainable online, which can complement what businesses on the high street offer,” Cooper says.
Cross points out that a few town centres have held up well. He attributes the decline of others to reasons including a lacklustre response from local authorities that have failed to appreciate the shifts in consumer behaviour and “the pivotal role that high streets play in supporting local communities”.
Harrogate Borough Council, by contrast, is well aware of such factors. With these in mind, it has set up a destination management organisation for the district. This works with several partners to host events, attract visitors and court investors. The overall aim, Cooper says, is “to create a strong local economy for businesses and residents”.
That is, of course, far easier said than done. Big regional department stores were often also big employers. Beatties in Wolverhampton, for instance, once employed 800 people. With its beauty parlour, hair salon and cafes, it was a real focal point for shoppers.
Beatties closed its doors for the last time in 2020. Most of the grand art deco building is due to be converted into flats, with some space retained for retail units.
In August 2021, Stephen Simkins, deputy leader of the City of Wolverhampton Council, said: “We need to ensure that a building of this importance is brought back into use. We have been working closely with the owners to ensure that they have the support needed to bring this scheme forward.”
As this special report goes to press, the planned redevelopment has still not started. Part of the delay may be down to Wolverhampton’s wider plans as part of Westminster’s levelling-up policies. The city is one of the government’s first two “pathfinder” locations and the council is working with the Department for Levelling Up, Housing & Communities on three main investment plans mixing residential, leisure and commercial developments.
Yet there may be a light at the end of the tunnel for the few town-centre department stores that are hanging on in there. Since the end of the Covid crisis, people seem to have been rediscovering the high street – in genteel tourist destinations such as Harrogate, at least.
“Figures issued in mid-March show that visitors to our district are making a greater economic impact here now than they were before the pandemic,” Cross reports.
Tourists stayed longer and spent 5% more in Harrogate last year than they’d done in 2019, contributing £637m to the local economy.
This will, no doubt, have been heartening news for Hoopers. For most town-centre department stores, the return of consumers to the high street cannot come soon enough.