Predictions for the high street after Christmas
November 13, 2018
Our research on store openings and closures demonstrates that the high street is in trouble with net closures of 1,123 shops in H1 2018. Challenging circumstances are nothing new for retailers, but compared with last year's net closures of 222, the rate at which stores are closing has rocketed. This change in the UK high street raises questions for legacy retailers and leisure operators. How can they restructure? What new investment do they need?
Increasingly, we're seeing retailers deploy CVAs as the answer to all of these complex questions. The rate of CVAs in retail has risen, despite the fact that 51%* of them fail. We believe that CVAs can be helpful restructuring tools, but they have to be part of a wider solution.
Despite the Christmas trading season now upon us we do still expect this trend to continue, particularly in the first quarter of the New Year when distress in retail is at its highest. I'd urge retailers to consider a broader, strategic approach that starts with the customer and includes a sustainable approach to cost reduction and investment.
To find out more about how we can help you, see here: https://www.pwc.co.uk/services/business-recovery/insights/retail-restructuring-cva-alone-not-the-answer.html
To find out more about store openings and closures in your industry and area, see here: https://www.pwc.co.uk/industries/retail-consumer/insights/store-openings-and-closures-report-h1-2018.html
For information on what CVAs are and how they work, see here: https://www.pwc.co.uk/services/business-recovery/what-are-company-voluntary-arrangements.html
*51% of them have failed (i.e. have led to a further insolvency process) between 1987 and August 2018 YTD. Taking a list of over 100,000 registered companies, we used the company registration number to query Companies House to understand if the company has been through an insolvency proceeding, and if so what proceedings were used. Taking this information we have been able to analyse the number of companies that have entered a proceeding by sector (based on SIC code). The retail sector is defined by a SIC (standard industrial classification) code that is adopted by UK's Companies House and other agencies in other countries. tment.