UK retail store closures reach lowest level since 2010

22 December 2017

UK retailers who are presently enjoying the final mad rush of Christmas shopping have another reason to smile over the festive season, according to new research. The closure of retail chain store outlets has fallen to its lowest rate in seven years.

Since the global financial crisis, British high streets have taken a consistent battering – with retailers Woolworths, media stores Zaavi and HMV, and electrical goods provider Comet among the formerly high-profile casualties of the economic turbulence that began with 2007’s infamous credit crunch. Major brands have been vacating bricks-and-mortar presences for years since, a process accelerated by the boom in disruptive ecommerce platforms over the past decade. However, according to the latest analysis from PwC and The Local Data Company (LDC), the number of stores closing in the UK has fallen to 14 a day – the lowest level since before 2010, the first half of which saw record volumes closures hit 3,361. Despite this progress, the East Midlands (+8) and Yorkshire in the Humber (+12) were the only regions to see growth in store openings, while Scotland (-42) saw the largest number of net closures out of all regions.

In an analysis of more than 67,000 outlets in the UK, PwC and the LDC found that 2,342 companies actually opened on high streets, retail parks and shopping centres, while 2,564 closed – averaging out at a net total of 222 closures. The leisure sector – consisting of food, beverage and entertainment – in particular thrived during the first half of the year, with 116 stores opening compared to 59 during the same time last year. This came in spite of warnings that consumers were likely to scale back their luxury spending amid falling currency value and stagnating wages.UK high street store closures reach lowest level since 2010Tobacconists, which saw a net increase of 34, beauticians (+29) and coffee shops (+24) were also among the fastest growing retailers during the first half of 2017, with ice cream parlours (+16) such as Ben & Jerry’s performing especially well. While food and drink sector manufacturing looks likely to suffer from the implications of Brexit, something likely to impact on prices and subsequent consumption in the long-term, food and drink retailers seem to be enjoying success at the moment. General fashion stores, banks and cheque cashing shops also saw their lowest number of net closures in three years.

Amid heating competition, meanwhile, supermarkets saw their physical ranks expand too. With a net increase of 17 stores across the UK, just eight shut compared to 25 openings, as new challengers such as Aldi and Lidl stepped up their efforts to bite into the market share of top names Tesco, ASDA, Sainsbury’s and Morrisons.

Not every retail segment enjoyed the same levels of expansion, however. According to the researchers, which also studied the top 500 British town centres, charity shops saw a net fall of 55, while women's clothes shops (-37) and shoe shops (-38) were also among those worst hit by closures. The rise to prominence of online property portals such as Rightmove also had an alarming impact on employment for many estate agents – as homebuyers and homeowners’ property needs were increasingly catered to digitally. High street estate agents subsequently saw a net decline of 36 units from 78 openings and 114 closures.

Encouraging signs

The UK remains one of the world’s leading fronts for consumer online purchases, meaning retailers have had to constantly evolve if they are to survive the threat of new e-competitors. PwC Consumer Markets Leader Lisa Hooker remarked that it was “encouraging” to see the high street “holding up” and “rallying” in particular cases, in spite of this growing move toward digital commerce.

Added to the fortification of offline retailers such as the Build-a-Bear group growing into the digital space, store openings in the UK have also included e-commerce names branching into the physical world, in order to make the most of both new digital opportunities and the country’s high streets. This is part of a global trend, which also saw Dutch clothing outlet CoolBlue launch its own bricks-and-mortar offering.

According to Hooker, who was promoted to her current role in the Autumn of 2017, “The twin cannons of increased online purchases and a touch economy have seen many retailers take a long, hard look at their store portfolios. There will always be a physical presence on the high street, but developments in technology are accelerating and impacting future staffing and operating models.”

Hooker added that ways of shopping were continuously transforming, and that questions were being asked over who ultimately “owned” the consumer. With increasing opportunities to shop elsewhere, consumers now exhibit a reduced level of ‘brand loyalty’, meaning retailers must pursue every available avenue to retain their custom.


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Lack of high street openings sees UK retail in precarious state

11 March 2019

Changes in consumer behaviour, particularly in favour of online shopping, are starting to take their toll on shop-fronts in the UK, while stagnant wages are hitting peoples’ willingness to go out for food and drink. As a result, the rate of closures is more than four times that for the same period in 2017, although largely reflecting of a lack of new openings.

The retail market has fallen under a cloud of uncertainty in the UK; consumer confidence has dipped, while wages have continued to malinger in negative territory. Retailers are also under pressure from disruptive technology, as consumer sentiment shifts to more online shopping and at-home leisure. While retailers have been able to weather the storm for the past years, transformations, low consumer spending and technology have begun to take their toll.

New analysis from PwC explores the current market conditions in the UK for retail shops, focused on net openings and closings. The market changes in the UK have seen the net closures to date hit 1,123 in H1 2018 across the UK’s top 500 high-streets. The rate of closures was considerably above openings for the first half of 2018, at 1,569 openings and 2,692 closures. Compared to H1 2017, more than four times as many shops closed than opened.

Openings and closures for retail industry

The study considered the most prominent areas to see a reduction in openings and net closures across the retail landscape. Overall, fashion stores were the hardest hit in absolute terms, with a total of 104 closures for H1 2018, followed by public houses and inns, which saw 99 closures in the same period. Electrical goods stores saw a net -44 decline, with a total of 8 openings for the period. Meanwhile charity shops were in a state of relative flux, with 80 openings to 117 closures. The firm notes that service sector shops, including estate agent, banks, recruitment agencies and travel agents, among others, too have begun the process of moving online.

Not all areas of retail saw closures, with coffee and ice cream shops seeing a small net increase in openings over all. Book stores – predictions of their total obliteration appear to have waned – saw a net 18 openings, while supermarkets drew the highest overall growth relative to closures, at 18 opened and 6 closed.

Regional figures for the UK

Not all areas have seen the same level of closures, with the Greater London area and the South East the hardest hit by the current wave of closures, at -268 and -197 net change, respectively, compared to -23 and -25 closures for the same period in 2017. The middle of England too saw considerable closures, with the West Midlands clocking a net -89, and Yorkshire and the Humber down -117 stores overall.

Commenting on the figures, Lisa Hooker, consumer markets leader at PwC, said, “Openings simply aren’t replacing closures at a fast-enough rate. Specifically, the openings across ‘experiential’ chains, such as ice cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories. Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.”

Related: Artificial Intelligence offers $340 billion opportunity to retail sector.