Retailer net closure rate drops by 50% in 2015, from 987 to 498 says PwC and The Local Data Company

• 2015 overall closures at lowest levels since 2010
• Lowest churn rate of openings and closures since 2010
• Coffee shops, jewellers and take away food shops thriving
• Cheque cashing, banks, women’s clothing feeling the pinch

Despite the rate of openings remaining constant at 13 per day in 2015, the rate of store closures across Britain fell from 16 closures per day in 2014 to 14 closures per day in 2015 in response to improving consumer confidence and the economic recovery.

According to PwC analysis compiled by the Local Data Company (LDC), 5,138 outlets closed in 2015 compared to 4,640 openings, equating to a net reduction of 498 shops. This is a drop of 50.4% when compared to 2014 where 5,839 outlets closed compared to 4,852 openings, a net reduction of 987 shops.

This is the lowest closure rate in five years since the peak seen in 2012, when 20 stores a day were closing. It also represents the lowest levels of High Street churn - entries and exits – since 2010 as retailers moderate their response to shifting customer shopping habits.

The analysis of 66,180 outlets operated by multiple retailers* in 500 town centres across Great Britain, found that overall volumes of activity (openings and closures) have fallen from 10,362 in 2011 to 9,778 in 2015 - a 5.6% drop (See Figure 1). This reflects a less hostile environment for embattled retailers with fewer administrations and reduced churn in response to the advance of online shopping.

2016 Outlook

In the period up to the 2nd week of March 2016, there was a net decline of -217 units across the top 500 town centres. Several retailers announced plans to close units such as Brantano Footwear, who went into administration. As well as, Dixon’s Carphone who will be merging their remaining PC World and Currys stores and putting a number of Carphone Warehouse stores into these units as well, thereby closing c.134 stores in the next 18 months. The tough winter trading has had an impact on the occupier market with the net decline in units (-217), above the -77 net decline recorded in the same period in 2014.

 

Coffee shops, jewellers and takeaway food were among those growing at the fastest rate during the first half of 2015 (See Table 1 below). Interestingly, charity shops have dropped out of the fastest growing businesses for the first time since 2010.

The data also reveal that cheque cashing, banks, women’s clothing shops, fashion shops, and convenience stores have been amongst the hardest hit in 2015. Against the backdrop of a modest economic recovery and tightening regulation within the industry, cheque cashing shops have closed 207 stores vs eight openings, a net change of -199.

Mike Jervis, insolvency partner and head of deals retail specialist at PwC, said:

“The lower rate of closures in 2015 reflects optimism amongst retailers and indeed most consumer confidence indices support this. In addition, retail insolvencies are at an historical low.

“The openings are concentrated on experience type outlets, especially food and beverage and I’d also expect to see more growth in discount store openings this year. The closures reflect ongoing structured changes in retail banking and the higher regulatory hurdles facing so called ‘money shops’.

“Fashion has taken another battering and the closures testify to the proliferations of “me too” retailers in this sub-sector, especially ladies fashion.

“Anecdotal evidence suggests that currently fewer leases are renewed on expiry so the closures reflect passive strategies by retailers as well as active closures. As more and more institutional leases expire, this is an area for landlords’ attention."

 

The comparison goods retail sector saw a mild recovery, with the net change in units dropping from -765 in 2014 to -234 in 2015. This represented a 69% drop in the number of traditional retailers closing in town centres (e.g. shoe & clothes shops). Service retail (e.g. travel agents, pawnbrokers) saw a continued net decline in shops from -457 units (-2.6%) in 2014 to -445 (-5.5%) in 2015. Leisure chains (food, beverage & entertainment) have continued to thrive with a slight increase in the net change in units from +233 (1.77%) in 2014 to +271 (+1.77%) in 2015.

The only sector that went against the grain in 2015 was the convenience retail sector. The convenience sector in 2014 had a positive net change of 2 units, but in 2015 this dropped to a net reduction of -90 units. The main driver of this change was convenience stores, which saw a net reduction of -62 in 2015 compared to net increase of +23 in 2014.

Matthew Hopkinson, director of The Local Data Company, said:

“These numbers illustrate the improvement in consumer confidence, low interest rates and low inflation that characterised 2015. They also show how high streets continue to evolve from a pure purchasing environment to one of experiences, services and above all food and beverage consumption rather than primarily goods consumption.

“Whilst stability has returned overall for the chain retailers in our high streets the fact remains that they have continued to close more shops than they open and have done so since 2011 with out of town locations being a destination of choice for many with free parking, easy access and more space to service and deliver the experiences that the modern consumer demands.

“I expect the overall trend to remain the same as banks continue to close large numbers of branches, traditional comparison goods retailers rationalise store numbers and the fact that the current exceptional growth of food and beverage outlets is unlikely to continue at the same pace in 2016.”

Ends

Notes to editors

1. *Multiples are retailers that have more than 5 outlets nationally
2. The analysis is derived from The Local Data Company visiting the top 500 town centres. Each premises was visited and its occupancy status recorded as occupied, vacant or demolished. Vacant units are those units, which did not possess a trading business at that location on the day we visited it. Internal shopping centre data is included where we have had co-operation from the landlord. The total number of multiples premises surveyed was 66,180.
3. The town centre is defined as per DCLG’s definition of the retail core. Scotland has no official retail core geography so the geography taken is the postal town area where not specified otherwise. Net change is openings less closures. The percentage change is derived from the net change figure relative to the total number of live multiple businesses.
4. The closures figure is the total number of closures divided by 365 i.e. days in 2015.
5. The 2016 Outlook figures are taken from January 1^st 2016 to 5^th March 2016.

About the Local Data Company

Sharing knowledge to create a better place to be’ is The Local Data Company’s (LDC) core purpose. It does this by combining powerful proprietary technology with a unique, field researched database of over half a million premises. LDC identifies opportunities and mitigates risk through delivery of insights, market analysis and unique profiling to the leading retailer and leisure occupiers, investors, landlords, banks, analysts and the media. Using its army of field researchers, LDC delivers primary evidence on thousands of locations, including high streets, town centres, shopping centres, retail parks and standalone out of town stores. LDC brings data alive and delivers clarity through its integration, aggregation and highly visual delivery along with unique modelling and analysis carried out in partnership with the UK’s leading universities.

 

Gill Carson
PwC | Communications
Office: 020 7212 1391 | Mobile: 07837 285466
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PricewaterhouseCoopers LLP
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