Boom on the high street 'will last until 1998'

Britain is set to enjoy a retail boom that will last until at least 1998, a new report predicts. Retail sales growth will peter out after that, though a wholesale downturn is unlikely, writes Nigel Cope.

The predictions are made in "Retailing 2000", published today by the retail consultancy Verdict Research. It forecasts that the current upturn in high street sales will continue, with UK retail sales growing by 6 per cent in 1997 and 1998, followed by a gradual slowdown.

The sector's improving fortunes will be supported by rising house prices and the consequent fall in negative equity, together with continued low inflation.

"We are optimistic about retail prospects," said Verdict's Richard Hyman. "This is a real upturn that will last for some time. But it is not the beginning of a 1980s-style consumer boom which will end in tears. The sector will remain highly competitive."

Verdict says that between now and the end of the decade total retail capacity will increase by more than 22 million square feet as large shopping centres such as Bluewater Park in Dartford, Kent, Cribbs Causeway near Bristol and Trafford Park in Manchester, start trading.

Mr Hyman suggests that the polarisation on the high street will continue, with the best retailers prospering while the rest struggle. "The good retailers are going to do very well but more moderate companies such as Sears, House of Fraser and WH Smith will not be able to rely solely on an improvement in the market. They have to solve their structural problems."

Branding will become increasingly important, with companies such as Next and Marks & Spencer the leaders in the clothing field. The report is also optimistic about the prospects for department stores. They will benefit from demographic changes such as the growing proportion of older people, the report says.

Electrical and grocery retailers will be the best performers over the next five years, with sales boosted by the surge in demand for PCs and other computer-based technology.

Mail order will remain under pressure with the decline of the traditional agency side of the business continuing.

Verdict is also bullish about the prospects for the high street. Though still under pressure from the large out-of-town shopping centres and retail parks, high streets are increasingly becoming popular destinations for comparison shopping, particularly for clothes. The report says local authorities need to invest more in their high streets, providing better services and facilities to enable them to compete with the out-of-town centres.