The outlook comes as the retail industry braces itself for a tough Christmas trading period as shoppers feel the pinch amid the ongoing cost-of-living crisis and record levels of inflation.
“People have said to themselves, ‘we’ve run out of money’,” said Professor Joshua Bamfield of the Centre for Retail Research.
Scores of major retailers went out of business in 2022, including Sofa Workshop and household retailer Made.com. Fashion chain Joules went into administration earlier this year, before the business was bought by Next.
Now a series of retail analysts have predicted another tough 12 months for the fragile sector, including a repeat of the 15,000 store closures and 128,000 job losses witnessed this year.
Professor Bamfield said: “I just see a continuation of the process we saw in 2022 where we have fewer and fewer retail stores selling merchandise, and more hairdressers and wellness clinics and tattoo parlours and so on. I expect the figures for 2023 will look much the same as they do for this year.
“We will know by May or June for sure but the fact we have had so many companies go bust in the last four weeks is perhaps a sign of the times. People have said to themselves, ‘We’ve run out of money’.”
On the issue of job losses, Prof Bamfield, added: “Many retailers are desperate for employees.
“But if you have a shop with nine or ten employees but customer footfall is down compared to 2019 by ten or 15 percent, they might say, ‘Let’s see how we get on with six members of staff’. That process is carrying on.”
The retail guru said he was forecasting a fall in retail sales of three percent in 2023.
Prof Bamfield also estimated the combination of high energy costs, wages and business rates meant that for many outlets there was no chance of making a profit at any time during the next 12 months.
Similarly, retail expert Richard Hyman predicted a grim future for the high street as figures for non-food retail sales in the three months to the end of October slumped by 1.2 percent. He explained: “Not enough shops have closed in recent years. Retail is still over supplied.
“Now we have a significant recession on our hands, but too much of the narrative focuses on the technical definition of a recession.
“Most consumers don’t care about that. They know about their income and they know that is now lagging behind what it costs to do the things they have been doing, so they will have to make economies. It is a question of how they prioritise and how they make those economies.
“A lot of the non-foods we buy is because we want them, rather than because we need them.
“That’s where the budgeting is going to happen. It is going to be a difficult couple of years while the UK economy gets smaller in order to get bigger again, and turn to growth at some stage.”
Susannah Streeter, markets analyst at Hargreaves Lansdown, said: “The high street has shown some deep pockets of resilience, particularly among retailers offering value, but as cost-of-living headwinds continue to whip up and a recession looms, 2023 is going to be a very challenging year.
“Retail sales are still below pre-pandemic times, and with more money being taken out of the economy through tax increases and higher energy bills, consumers are likely to continue to rein in expenditure.”
Other commentators took a more positive tone suggesting that if the high street were able to adapt to changing consumer habits it could still enjoy a bright future, despite the challenges ahead.
Malcolm Pinkerton, senior director of Strategic Insights at Kantar, said: “We can expect to see the high street continue to adapt itself towards growing areas such as takeaways, personal services such as salons and hairdressers, and entertainment spaces, to drive more consumers to the high street.
Nick Carroll, Mintel’s category director of retail insights, added: “The future of the high street must be one built on providing a ‘multimission experience’ – with shopping destinations allowing shoppers to complete multiple goals at once.”
And Martyn James, independent consumer champion, said 2023 could be a “a turning point” for the struggling retail sector.
He said: “I can see former department stores becoming huge, shared retailer franchises, where consumers order goods to the store, and try them on with friends while enjoying a glass of wine or a spot of lunch.”