Internet and changing client needs behind decline in high-street recruitment agency branches
31 March 2014
A recent analysis of high-street openings and closures showed that recruitment agencies had one of the highest closure rates in Britain's town centres last year for retailers with multiple stores.
Mon, 31 Mar 2014 | Sam Sachdeva
A recent analysis of high-street openings and closures showed that recruitment agencies had one of the highest closure rates in Britain's town centres last year for retailers with multiple stores.
Recruitment industry figures tell Recruiter the closures are a sign of the decreasing importance of a high-street location, with the internet and changing client and candidate needs being key reasons for the decline.
The data, released by PwC and the Local Data Company, shows there was a net loss of 84 recruitment agency offices in 2013 – a decrease of 8.2%, the third-highest closure rate behind only photography retailers and video libraries.
In contrast, the number of charity shops rose by 4.7%, and convenience stores by 9.93%.
Geoff Newman, managing director of online recruiter RecruitmentGenius.com, previously the managing director of high-street recruiter Acorn Recruitment, which closed in 2009 due to rising costs, says the closures show that the recruitment market is still recovering from the economic downturn.
“Employers aren't using traditional high-street recruiters like they used to – they're still using specialist agencies but the market has been shaken up too much.”
Newman says the less specialised approach of high-street agencies means they are more price-sensitive and willing to alter their business models to cut costs, such as by closing offices and increasing their online focus.
Another factor is the high number of recruiters who started their own agencies after being made redundant from the bigger firms, as they have shown others that it is possible to work successfully without a fixed office.
“I met a recruiter the other week who was interviewing people in a hotel room by a train station – everyone's had to become more flexible.”
However, Newman says any talk of the death of high-street agencies is premature, and believes the closures in 2013 are unlikely to be repeated over the next few years.
“I think everyone that's really suffered has already hit the wall, and I do believe confidence is coming back as it is cyclical in nature.”
However, he says recruiters need to build stronger relationships with their clients to justify their office costs and high-street presence.
“They need to add value along the whole chain; it's not just about getting a CV and forwarding it on any more.”
BCL Legal managing director James Batt says the legal recruitment consultancy, which opened its first London office in March last year, is in a strong position compared to high-street agencies, thanks to its more specialised focus.
“Certainly in terms of our space, we're very niche as a legal recruiter and we've got no plans to go outside of that… as we feel that would dilute our strengths. If you're just looking to attract candidates through the internet and any way you can, you're just diluting over and over again, and you get a very bland, low-level offering.”
Batt says while there will always be a place for large-scale recruiters, to be successful they may need to adapt to new models and reduce the emphasis on traditional measures of success such as high street offices.
“If it was me, I would be thinking, 'Do we really need that £100k per year lease to have people come in off the street, or can they go online?’ You don't need prime pieces of real estate to attract people.”
Andy Hogarth, chief executive officer of national recruiter Staffline Group, supports that view, and says his recruitment and outsourcing organisation has started moving from high-street sites to serviced offices and second-floor spaces due to the declining importance of a street-front spot.
“In the old days, people came to you because of the location – they got off the bus and you were the first office they saw. Now, because of the internet, they’re attracted to the branch because of what they’ve already seen online.”
Hogarth says the changing value of office locations is best seen as “evolution rather than revolution”, with face-to-face interaction at a branch still important to clients.
“People still value the personal interactions that you get with a branch: the way people come to you is different so you don’t need to spend as much [on the location], but they do still want to come to you.”
Many of the large recruiters were unwilling to discuss the statistics when approached for comment by Recruiter.
However, Randstad Business Support managing director Ruth Jacobs says her division enjoyed a “really strong” 2013 as a result of the structural changes the multi-specialist recruiter had already made.
“Yes, clients’ needs are changing and yes, of course, the market continues to be challenging in certain regions, but we made a lot of changes to the way our business is structured a few years ago, such as our branch network reach and the disciplines we focus on.
“I think the key thing the last six or seven years have taught is that you have to reinvent yourself sooner rather than later otherwise it can be too late.”
Jacobs says Randstad’s decision to deliver a more focused service means it is now “reaping the rewards” and in a position to recruit new consultants.
Recruitment & Employment Confederation (REC) CEO Kevin Green says the “slight” decrease in the number of high-street branches is not surprising, as businesses look to cut their overheads and find cheaper ways to provide their services.
“We are a maturing market and this kind of consolidation is to be expected.
“Town centre locations aren’t always necessary for providing an excellent service when a recruiter has a strong presence online, offices on site or a well-known brand and strong relationships with local employers.”
Green says statistics show that the recruitment industry is growing, with the number of recruitment personnel increasing each year since 2009/10 along with revenue and projected growth of 25% in the next three years.
Recruitment industry figures tell Recruiter the closures are a sign of the decreasing importance of a high-street location, with the internet and changing client and candidate needs being key reasons for the decline.
The data, released by PwC and the Local Data Company, shows there was a net loss of 84 recruitment agency offices in 2013 – a decrease of 8.2%, the third-highest closure rate behind only photography retailers and video libraries.
In contrast, the number of charity shops rose by 4.7%, and convenience stores by 9.93%.
Geoff Newman, managing director of online recruiter RecruitmentGenius.com, previously the managing director of high-street recruiter Acorn Recruitment, which closed in 2009 due to rising costs, says the closures show that the recruitment market is still recovering from the economic downturn.
“Employers aren't using traditional high-street recruiters like they used to – they're still using specialist agencies but the market has been shaken up too much.”
Newman says the less specialised approach of high-street agencies means they are more price-sensitive and willing to alter their business models to cut costs, such as by closing offices and increasing their online focus.
Another factor is the high number of recruiters who started their own agencies after being made redundant from the bigger firms, as they have shown others that it is possible to work successfully without a fixed office.
“I met a recruiter the other week who was interviewing people in a hotel room by a train station – everyone's had to become more flexible.”
However, Newman says any talk of the death of high-street agencies is premature, and believes the closures in 2013 are unlikely to be repeated over the next few years.
“I think everyone that's really suffered has already hit the wall, and I do believe confidence is coming back as it is cyclical in nature.”
However, he says recruiters need to build stronger relationships with their clients to justify their office costs and high-street presence.
“They need to add value along the whole chain; it's not just about getting a CV and forwarding it on any more.”
BCL Legal managing director James Batt says the legal recruitment consultancy, which opened its first London office in March last year, is in a strong position compared to high-street agencies, thanks to its more specialised focus.
“Certainly in terms of our space, we're very niche as a legal recruiter and we've got no plans to go outside of that… as we feel that would dilute our strengths. If you're just looking to attract candidates through the internet and any way you can, you're just diluting over and over again, and you get a very bland, low-level offering.”
Batt says while there will always be a place for large-scale recruiters, to be successful they may need to adapt to new models and reduce the emphasis on traditional measures of success such as high street offices.
“If it was me, I would be thinking, 'Do we really need that £100k per year lease to have people come in off the street, or can they go online?’ You don't need prime pieces of real estate to attract people.”
Andy Hogarth, chief executive officer of national recruiter Staffline Group, supports that view, and says his recruitment and outsourcing organisation has started moving from high-street sites to serviced offices and second-floor spaces due to the declining importance of a street-front spot.
“In the old days, people came to you because of the location – they got off the bus and you were the first office they saw. Now, because of the internet, they’re attracted to the branch because of what they’ve already seen online.”
Hogarth says the changing value of office locations is best seen as “evolution rather than revolution”, with face-to-face interaction at a branch still important to clients.
“People still value the personal interactions that you get with a branch: the way people come to you is different so you don’t need to spend as much [on the location], but they do still want to come to you.”
Many of the large recruiters were unwilling to discuss the statistics when approached for comment by Recruiter.
However, Randstad Business Support managing director Ruth Jacobs says her division enjoyed a “really strong” 2013 as a result of the structural changes the multi-specialist recruiter had already made.
“Yes, clients’ needs are changing and yes, of course, the market continues to be challenging in certain regions, but we made a lot of changes to the way our business is structured a few years ago, such as our branch network reach and the disciplines we focus on.
“I think the key thing the last six or seven years have taught is that you have to reinvent yourself sooner rather than later otherwise it can be too late.”
Jacobs says Randstad’s decision to deliver a more focused service means it is now “reaping the rewards” and in a position to recruit new consultants.
Recruitment & Employment Confederation (REC) CEO Kevin Green says the “slight” decrease in the number of high-street branches is not surprising, as businesses look to cut their overheads and find cheaper ways to provide their services.
“We are a maturing market and this kind of consolidation is to be expected.
“Town centre locations aren’t always necessary for providing an excellent service when a recruiter has a strong presence online, offices on site or a well-known brand and strong relationships with local employers.”
Green says statistics show that the recruitment industry is growing, with the number of recruitment personnel increasing each year since 2009/10 along with revenue and projected growth of 25% in the next three years.
