Traditional Traders Feel the Weight of Online Retailers

On-line and out-of-town retailers are ruffling conditions for town center traders in the U.K.

by William White

A report by market analyst Verdict, published today, says in 2005, year-on-year sales on the high street dropped for the first time in 20 years. At the same time the report predicts, that online and out-of-town traders will continue to steal ground from traditional traders.

Customer spending in town centers in 2005 dropped by £767 million. At around 0.6 percent, this represents the first year-on-year decline in sales since the 1980s. Profit margins were further reduced by an average 0.6 percent drop in the price of goods.

The Verdict report also observes that while profits are declining high street retailers are faced with an average 3.6 percent increase in rents.

Reporting that last year 12 major retailers either went into administration, were put up for sale or went out of business, Nick Gladding who prepared the report, says high street traders were bearing the brunt of the UK’s changing market.

“What we are seeing“ Gladding said, ”is a shake-out of the weaker operators and I think there will be more in the future.”

Last year the failure rate was said to be triggered by a combination of weak demand, deflation and contrasting costs.

Gladding says that planned investment and development in several town centres could be good news for consumers.