The number of large department stores* in England has fallen by 25% in less than a decade to just 180**, down from 240 in 2009, says Lendy, one of Europe’s largest peer-to-peer secured lending platforms.

Lendy explains that the total number of shops in England has also fallen, by 1% to 403,000 down from 407,000 over the same period.

Department stores have been more sharply affected than the rest of the high street by online shopping as the unusually heavy debt burdens carried by department store groups has hampered their own investment in ecommerce and in store refurbishment.

The department store groups have built up that debt burden through an unusually high level of M&A activity that the sector has been subject to in the last 15 years.

For example, the purchase of Debenhams by PE investors in 2003 gave it a debt pile of £1bn that it has been paying down since then. BHS went into administration with debts of £1.3bn after its owners used debt to help fund dividend payments.

House of Fraser and Debenhams are currently looking to restructure their businesses.

After issuing a profits warning at the start of the year Debenhams plans to downsize at least 30 of its stores, while House of Fraser has recently announced plans to launch a Company Voluntary Arrangement (CVA) in June, after they requested a rent cut in January.

With money being spent on servicing the debt repayments, rather than investing in their e-commerce channels they have been unable to meet the challenge of online competitors such as ASOS or Farfetch.

Other large format retailers that have struggled in the current economic climate include Marks and Spencer, who have recently announced plans to close 100 stores.

Despite ongoing pressures facing the retail sector, Lendy says that retail property can still be a sensible choice for property investors. However, investors must pay close attention to the financial strength of the retailer and ensuring that the yield on the property makes up for the risks in the sector.

Liam Brooke, co-founder of Lendy, comments: “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.”

“However, retail property can still be a successful investment as part of a diversified portfolio. As with all property, retail property investors must carefully consider all risks when deciding to invest in certain projects or not.”