Number of English department stores has plunged, decline continues

By

Sandra Halliday

Published
May 29, 2018

Department store numbers have plummeted in England over the last decade. And it looks like they'll continue to fall as House of Fraser prepares to close a number of stores that could add up to as many as 30, and as Debenhams also plans closures.

A new report shows that the number of large department stores in the country is down 25% since 2009, from 240 to the current 180.

Lendy, the peer-to-peer secured lending platform, conducted a study that showed large department stores declining faster than the average English drop in physical retail locations as a whole. While department store numbers have dropped by a quarter, the total number of shops in England is down only 1% to 403,000 in the last decade.

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So why have department stores been hurt more than other stores over a period of fast change that has seen the rise of e-tail? Well, first of all we have to recognise that other store types have also closed in large numbers, but have been replaced by different stores, leading to that overall tiny net decline.

But factoring that out, department stores do seem to have some particular problems unique to them.

The report said that their ability to invest in their websites and their physical stores has been held back by heavy debt loads after an unusually high level of merger and acquisition activity in the sector over the last 15 years.

The 2003 private equity buyout of Debenhams saw it being weighed down by a debt load that it has had to service ever since. Additionally, upgrading websites and physical locations is hugely expensive and very complicated for these retailers as their stores are very big and their e-stores are equally large, drawing in massive numbers of brands. 

Other large-format retailers with a similar spread of products to department stores, such as M&S and BHS, have suffered many of the same problems around debt and a need for heavy investment spend. 

BHS had a £1.3bn debt load at the time of its failure in 2016 and M&S has had to spend hundreds of millions on its e-commerce site and its stores without having reached a point at which it’s happy.

The closure of department stores and those other large-format chains has also raised problems for landlords and local authorities. Large sites are hard to let and when they lie empty for long periods that can dent the appeal of high streets and shopping centres for consumers.

Liam Brooke, co-founder of Lendy, said: “The falling number of department stores shows they have borne much of the brunt of the shift towards internet shopping.

“Local authorities will have to consider whether they want to make it easier to change the use of department stores to being partly residential as it will be hard to fill these properties with new tenants.”