UK retail store closures reach lowest level since 2010
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.
Tobacconists, 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.
