• M&S store-closure plans show UK retail sector’s vulnerability to online disruption

        • As Marks & Spencer plans to close over 100 stores by 2022, Scope Ratings sees this as the latest signs of how particularly vulnerable the UK retail sector is proving to digital disruption in Europe.

          The move by M&S follow other signs of stress in the UK sector. Several smaller retailers have failed in the past year— fashion store East, shoe retailer Shoon and bed suppliers Feather & Black and Warren Evans—in an echo of the “retail apocalypse” in the US where more than 130 large retailers have filed for bankruptcy in the past three years. In contrast, retailers in continental Europe have so far proved relatively resilient.

          Scope believes that while the impact of the online shopping revolution in the US and UK are similar, there are some specific circumstances in Britain which have made conditions particularly difficult for retailers compared with their peers on the continent.

          Adrien Guerin, Analyst at Scope said, “Britain has one of the world’s most developed markets for so-called omni-channel retailing (a mix of physical and online commerce), with high levels of online penetration and public acceptance compared with other parts of the world. Bricks-and-mortar companies have had to react fast to keep online competitors at bay.

          PwC’s Global Omnichannel Retail Index for 2017 showed the UK was second only to the US in the level of omnichannel retailing, well ahead of other European countries, notably Germany and France.

          Other data demonstrate how far advanced e-commerce is in the UK compared with the rest of Europe. The UK had the highest proportion of individuals in 2016 who had purchased online in the previous 12 months in addition to the highest amount of per capita parcel delivery in 2015, according to data from Dutch mail company PostNL.

          Adrien added, “recent consolidation among major retailing groups in the UK might also increase pressure on midsize and smaller competitors in the future.”

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