Retailers closing 15 stores a day as the high street continues to reshape, says PwC and The Local Data Company

 

• Lowest number of store openings since 2011

• Tobacconists, estate agents and jewellers thriving

• ‘Fintech’ advances see click and collect services booming

 

 

In the first six months of 2016, 2,656 shops closed on Great Britain’s high streets, a rate of 15 stores a day, PwC research compiled by the Local Data Company (LDC) reveals.

This is a slight increase on the 14 stores a day reported to have closed in the first six months of 2015. However, the number of new openings has also fallen, leading to a net 503 stores disappearing from high streets, retail parks and shopping centres in the first half of 2016. This represents the highest net decline since H1 2012, when 953 more stores closed than opened (See Figure 1).   

A contributing factor is the advance of online shopping, which has led to an overhaul of retail store strategies for national chains. LDC analysis shows there are over 22,200 click and collect services across 130 of the largest national retailers. Carphone Warehouse (+129), ScrewFix (+58), Toolstation (+36) and Lloydspharmacy (+33) have seen the biggest growth in click and collect services between 2015 and 2016.

Madeleine Thomson, retail and consumer leader at PwC, said:

“Despite the uncertainty and fall in number of store openings, consumer sentiment has rebounded following the post-EU referendum dip. With employment levels still high and price inflation yet to hit the shops, the majority of the UK public believe they will be better off in 12 months.

“If we look ahead to Black Friday and Cyber Monday (25^th and 28^th November respectively), upcoming research shows that 27% of consumers intend to make purchases, spending on average £203 over the weekend. Of this spend, 17% of will be in store (rising to 24% for over 55s).

“To increase footfall to their stores, it is key for retailers to ensure their in store offering and price point is relevant for the younger demographic who are particularly high users of online channels and very price savvy. Our Total Retail research** shows that consumers value shop assistants with a deep knowledge of the product range, the ability to check stock quickly and to see and order online ranges in store.”

Figure 1. Opening and closures of multiple retailer units, 2010-2016

 (Source: Local Data Company)

The analysis of 66,401 outlets operated by multiple retailers* in 500 town centres across Great Britain found that overall volumes of activity (openings + closures) have plummeted from a record 7,749 in H1 2010 to 4,809 in H1 2016.

Tobacconists, health clubs and jewellers were among those growing at the fastest rate during the first half of 2016. Take away food shops and American, Italian and Japanese restaurants have all thrived.

The data also reveals that across multiple retailers in 500 town centres fashion shops, banks, mobile phone shops, and Women’s clothing shops have been amongst the hardest hit in the first half of 2016.

With the emergence of online and various other career-related portals (e.g. LinkedIn) supporting recruitment, high street recruitment agencies saw a net decline of 46 units (29 openings vs. 75 closures).

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

"We are seeing far fewer closures due to outright insolvencies, but more due to lower key restructuring of store portfolios. This is still having a negative impact particularly on the High Street - interestingly, units on retail parks are far easier to find alternative tenants for.

“The data covers the first half of 2016. Since then there has been more evidence of stress in certain parts of the retail sector as costs challenges begin to crystallise. These include foreign exchange rates, Living Wage pressures and business rates increases.

“These can be managed provided revenue is maintained - so consumer spending is key. The area where we expect most problems is in fashion retailing where recent data points to lower

sales volumes.”

Table 1. Top risers and fallers by business type in H1 2016

(Source: Local Data Company)

Risers	Net Change (Units)	Number of openings	Number of closures	Fallers	Net Change (Units)	Number of openings	Number of closures
Tobacconists	28	60	32	Fashion shops	-87	119	206
Estate Agents	26	102	76	Banks & Other Financial institutions	-82	20	102
Jewellers	24	62	38	Clothes- Women	-56	17	73
Takeaway Food Shops	19	48	29	Mobile phones	-46	48	94
Restaurant- American	15	18	3	Recruitment Agencies	-46	29	75
Health Clubs	14	39	25	Clothes- Men	-39	15	54
Coffee shops	14	73	59	Cheque Cashing	-35	6	41

Comparison goods retailers are under the most pressure across Great Britain with fashion stores and men’s and women’s clothes shops all in the six hardest hit sectors. Jewellers are the main anomaly, with +24 (2.07%) new stores across GB in H1 2016.

Leisure chains (food, beverage & entertainment) have continued to thrive, with the growth rate rising from +43 stores opening in H1 2015 to +57 (+0.36%) in H1 2016. Cheque cashing, which saw a net reduction of 35 shops, continues to see churn due to tighter regulations in the industry, with other categories with similar services such as Bureaux de change (+5.07%) benefiting from their decline in store numbers.

Across the regions...

Table 3. Openings and closures of multiple retailers by region across the top 500 GB town centres in H1 2016

Country/	Number of store openings	Number of store closures	H1 2015 net change	H1 2016 net change
English Region*
East Midlands	125	146	-37	-21
East Of England	190	198	-57	-8
Greater London	536	700	-63	-164
North East	100	105	-21	-5
North West	144	179	-65	-35
Scotland	116	203	-26	-87
South East	355	445	-22	-90
South West	214	224	-22	-10
Wales	51	69	-23	-18
West Midlands	144	189	-65	-45
Yorkshire and the Humber	178	198	-36	-20
Total	2,153	2,656	-437	-503

 (Source: Local Data Company)

Greater London saw the biggest increase in net closures across all the regions. The capital’s net change increased to -164 stores in H1 2016, from -63 stores in H1 2015. Expected increases in business rate valuations in late 2016 may see this trend continue into H1 2017.

Retail parks were the only location type to see growth in the number of occupiers, although their activity levels were significantly lower than both high streets and shopping centres. Shopping centres had the highest percentage net loss, of -1.0% in H1 2016.

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

“The retreat of multiples from town centres across Great Britain continues, reflecting the wider changes happening in retail driven by the retrenchment of comparison goods retailers, especially in clothing and footwear.

“The role of the store continues to evolve. Provision of a seamless on and offline experience is key. ‘Click and collect’ is but one example of this.

“Chains are having to work harder than ever to guarantee store location, format and experience along with a strong web presence, social presence and logistical operation that delivers to consumers’ ever increasing demands of ‘now’. This is severely impacting profitability and hastens store closures.

“The spaces left by the traditional occupants of our high streets are being increasingly filled by health care operators, food and beverage operators and the ongoing rise of the discounters. Understanding the ‘who’ and ‘where’ when it comes to multiple retailers is the key to create the destination that leads to successful and healthy town centres.”

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 66,401.
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 183 i.e. half of the days in 2016 (366).
5. Retail parks are retail warehouses with three or more adjoined units. Shopping centres are groups of shop clustered together under one cover with ten or more units.
6. **PwC’s Total Retail research can be found at: http://www.pwc.com/gx/en/industries/retail-consumer/global-total-retail.html

 

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About the Local Data Company

LDC is the UK’s leading data creator using real people on the street to acquire the most up to date, on demand location and company specific data for the retail and leisure sectors. It combines powerful proprietary technology with a unique, field researched database of over half a million premises. LDC delivers primary evidence on thousands of companies and locations, including high streets, town centres, shopping centres, retail parks and standalone out of town stores.

For more information please contact David Jetuah [email protected]/07531 439437 or Stephen Young: [email protected]/07789808745