Retailers shutting up shop plummets to its lowest level for five years
October 21, 2015
In the first six months of 2015, 2,634 shops closed on Great Britain’s high streets, a rate of 14 stores a day. PwC’s analysis of 65,588 outlets in 500 town centres across the UK was compiled by the Local Data Company (LDC). We found that overall volumes of openings and closures have plummeted from a record 7,749 in 2010 to just 4,831 in 2015.
After reaching 16 store closures per day in 2010, the rate of closures peaked at 20 in the first six months of 2012 before steadily dropping to today’s levels. This reflects a less hostile environment with fewer insolvencies and store portfolios streamlined in response to the advance of online shopping.
Fewer retail outlets
But it’s not all good news. In the first six months of 2015 there were 2,634 store closures and only 2,197 openings, which means 437 fewer outlets on our high street.
H1 2015 represents the lowest levels of churn we have seen on the high street for at least five years. On the positive side there have been fewer retail insolvencies, on the negative side it means less confidence in bricks and mortar from the multiple chains.
The closures are caused by sector-specific factors: regulation is hurting money shops, the internet is hurting traditional bricks and mortar fashion chains.
Cheque cashing, banks, fashion shops, gift shops, and women’s clothing shops have been among the hardest hit in the first half of 2015. Against the backdrop of a steady economy and tightening regulation, cheque cashing shops have closed 116 stores with only six openings, a net change of -110.
The streets are paved with gold for some
On the other side of the coin, coffee shops, charity shops and jewellers were among those growing at the fastest rate during the first half of 2015. Leisure chains, such as, food, beverage and entertainment have continued to thrive albeit at a slower rate, with the number of outlets up by 43 in this period.
There are some differences within the leisure sector though. Burger chains, cafes, coffee houses and tea rooms are growing while pubs and betting shops are closing.
The tug of war between ‘clicks’ and ‘bricks’ has forced major changes on the high street not only for the retailers, but also for landlords too. The average unexpired length of a lease is now less than nine years compared to 22 years back in the early 1990’s. The renewal rate on leases is down to 9% in recent years, compared to 30% in the mid 2000’s. Landlord groups see tenants competing fiercely for prime pitches but are seeing retailers allowing leases to expire in peripheral locations.
I’m interested in hearing your thoughts on this trend. If the economy is really thriving and consumer spend is increasing, would you not expect to see overall expansion in retail? Please share your thoughts below or schedule a meeting to discuss your situation in confidence.
