The building that houses Carlisle’s House of Fraser department store changed hands for £13.3m as recently as 2013.
The buyers – investors operating through companies in Kuwait and the Channel Islands – probably thought they had a blue-chip tenant who would provide a reliable income stream for the foreseeable future.
How quickly things change.
If House of Fraser’s creditors agree to a proposed Company Voluntary Arrangement, it will walk away from lease commitments as it closes 31 of its 59 stores including Carlisle and its flagship branch in London’s Oxford Street.
It’s not as if House of Fraser is an isolated example.
Poundworld, which shops in Workington and Whitehaven, fell into administration this week.
Mothercare, New Look and Carpetright are closing stores and so is Marks & Spencer, which plans to shut 100 of its 300 high street stores by 2022.
Independents are going too. Carlisle, for example, has lost Alternative, the Cookware Company, Freetime and Turnbulls since the start of the year.
Why are so many retailers struggling?
Rob Johnston, Chief Executive of Cumbria Chamber of Commerce, said: “There are three main factors at work.
“The first is the switch to online shopping. Some 24.1% of non-food items are bought online, up from 11.6% five years ago.
“That isn’t the only reason. Consumers have seen their spending power eroded since 2016 because wages have lagged behind inflation.
“And retail businesses have been battered by rising costs, some of them inflicted by the Government.
“Business rates increased by 3% in line with inflation in April, the National Living Wage increased by 4.4% – well above inflation – and employers’ auto-enrolment pension contributions doubled.
“These costs hit retailers disproportionately because they are labour-intensive businesses with a high proportion of staff on Minimum Wage rates.
“The weak pound hasn’t helped either. It makes imports more expensive. High street retailers have been reluctant to pass on the increases, for fear of losing market share to online competitors, and that has squeezed margins.”
David Jackson, Commercial Director of the Lanes Shopping Centre in Carlisle, agrees with Rob’s analysis but believes there is another factor in play – changing consumer behaviour.
He said: “There has been a change in how people spend their time and money.
“Clothing is no longer the be-all and end-all on the high street. People are buying into experiences whether it’s a weekend away or a meal out or drinks with friends. We are all doing more of that.”
“Town and city centres need to change to reflect that.
“There has been a fall in demand from larger stores. In Carlisle we’ve seen the demise of Woolworth, Hoopers, Littlewoods, C&A, BHS and now House of Fraser. Some of these have been replaced by the likes of Primark but not to the extent that the larger operators are disappearing.”
The House of Fraser building will become vacant when the store closes after Christmas.
David said: “It’s 60,000sq ft of floorspace over four floors – there aren’t any retailers that want that amount of space. It needs to be subdivided.
“You could have retail on the ground floor and different uses on upper floors. That could be restaurant use, offices or residential.
“Carlisle city centre needs a cinema – the cinema in Botchergate is off-pitch as far as retail is concerned – a remodelling of the House of Fraser building with a cinema and restaurant, bang in the middle of town, could work well.”
He added: “Town centres do need to change.
“Just because a property has been a shop doesn’t mean that it’s going to stay that way in five, 10 or 20 years’ time.
“Local authorities need to be more open to change. If you’re a shop and want to change to something else you have to apply for planning permission for change of use. That can take longer than it needs to do.”
This type of change of use is happening now in Kendal, where K Village is applying for planning consent unused retail space into a 69-bedroom Travelodge Hotel and 70 apartments.
The latest Retail and Leisure Trends Report, published by the Local Data Company, confirms the acceleration in store closures.
In the North West, there was a net loss of 214 retail units in 2017.
Town centres bore the brunt of store closures – in contrast, there was a net increase of 34 in the number of units at out-of-town retail parks.
Similarly, the percentage of shop premises that are vacant increased in town centres but declined at retail parks.
The fastest-growing categories of retail business are barbers, beauty salons, tobacconists, cafes and nail salons, while the businesses most likely to close are pubs, banks, travel agents, post offices and newsagents.
Professor Frank Peck, of the University of Cumbria’s Centre for Regional Economic Development, believes that high street retailing has a bright future as long as town centres evolve and adapt.
He said: “There will always be people who want to come into town centres to shop. They like doing that.
“Increasingly, people will see town centres as activity spaces rather than simply shopping centres. The more things that you can have there to attract people, the more footfall you get – and it’s all about footfall.
“Town centres have always hosted events and provided entertainment but this aspect has become more prominent, it’s a must-have.
“Regular events such as farmers’ markets can bring people in, but you need to have activities that don’t compete with established shops.”
Business Improvement Districts (BIDs) have been particularly successful at promoting events. These are organisations run by businesses and funded by a modest levy on business rates.
Barrow, Kendal, Penrith and Ulverston all have BIDs.
Ulverston BID, for example, negotiated with South Lakeland District Council to offer reduced-priced parking on summer Saturdays to bring in shoppers.
Rob Johnston said: “Lack of parking and the high cost of parking were flagged-up time and again when the Chamber consulted Cumbrian businesses on transport issues earlier this year.
“Retailers in Carlisle city centre, for example, are competing with Gretna Gateway Outlet Village 10 miles up the road, which has free parking.
“We’d like to see local authorities taking a lead by reducing parking charges, increasing provision where it’s needed and introducing pay-on-departure charging regimes that encourage shoppers to stay longer.”© Cumbria Chamber of Commerce