Fitness and food replaces fashion and finance as the British high street continues to evolve

Tobacconists, health clubs and jewellers are among the retail chains growing at the fastest rate on Britain’s high streets during 2016, according to research conducted for PwC by The Local Data Company (LDC). Take away food shops, ice cream parlours and American and Italian restaurants also thrived last year, as the high street continues to rebalance from shopping to leisure.

The research also reveals that the number of cheque cashing outlets,  clothing and fashion shops, banks, and insurance agencies all declined in 2016. With the growth of online recruitment and career-related sites (e.g. LinkedIn) supporting recruitment, high street recruitment agencies were also impacted.

LDC’s analysis of out of town locations (retail parks) shows an opposite picture where chain retailers have continued to expand and in 2016 saw an increase of occupied stores by 307 (+3%). This number illustrates the structural change that has been taking place from many town centres to out of town retail parks.

Mike Jervis, retail specialist at PwC, said:

“The research clearly highlights the changing face of town centres - leisure and experience destinations continue to replace traditional high street stalwarts. The insatiable appetite for fast food and coffee shops fills the void left by banks, mobile phone and clothing shops.

“Fashion is migrating to online at a faster rate than ever, leaving closures in its wake. Last year was relatively benign for restructuring and insolvency in all sub-sectors of retail, so the net closures points to structural changes in customer behaviour more so than a consumer slowdown.”

Commenting more broadly on the retail sector, Madeleine Thomson, retail and consumer leader at PwC, continued:

“2017 will be a crucial year for retailers. The combination of price inflation on goods and groceries will mean that brand loyalty will play a more significant role than ever.“However, with prices on the up and less disposable income available to the average British consumer as a result, retailers will need to be versatile and savvy to increase footfall to their stores. Our Total Retail research** shows that almost half (48%) of UK shoppers buy online because they find it more convenient than visiting a shop. However, despite the fall in new store opening, consumers continue to place value on the in-store experience, with the number one in-store attribute being shop staff with a deep knowledge of their product range.

“As we look ahead, the ‘Total Retail’ experience looks to be defined as simple and streamlined; one that maintains a human touch, blending the best of technological advances with helpful and expert staff both in-store and online.”

Leisure chains (food, beverage & entertainment) continued to grow in 2016, with a net increase of +126 units (+0.78%). This net change was more than half of the +271 (+1.77%) new units in 2015 suggests the sector may be seeing early signs of saturation. Health clubs were the main winner in 2016, jumping from a net change of +6 units in 2015 to +46 units in 2016.

Convenience and service retail have seen an improvement in 2016, with 62 and 72 fewer closures than in 2015 respectively. In the Convenience sector this was driven by improvement in the performance of bakers shops and convenience stores.

Comparison goods retailers are under the most pressure across Great Britain with fashion stores, department stores and men’s and women’s clothes shops all among the seven hardest hit sectors. Jewellers are the main anomaly, with +38 (3.26%) new stores in 2016. Department stores were mainly hit due to the closures of all 164 BHS stores. It’s also facing challenges adapting to new consumer patterns (click & collect) and fast fashion trends, with online sales accounting for 40% of total sales.

The analysis of 66,807 outlets operated by multiple retailers* in the top 500 town centres across Great Britain found that overall volumes of activity (openings + closures) have fallen from 13,109 in 2012 to 9,964 in 2016 (-24%).

In 2016, 5,430 outlets closed on Great Britain’s high streets, a rate of 15 stores a day, a slight increase on the 14 stores a day reported to have closed in 2015, when 5,138 outlets shut. However, the number of new openings has fallen to a record low (12 stores a day) since research began, partly due to uncertainty in the market in the lead up to the referendum vote. This equated to a net loss (difference between number of closures and openings) of 896 stores disappearing from Great Britain’s town centres in 2016, the highest net decline since 2012 when there was a net loss of 1,761 stores (See Figure 1).

 

Greater London saw the biggest increase in net closures across all the regions. The capital’s net loss of stores increased to -232 stores in 2016, from -67 stores in 2015. Competition for units and saturation in certain London suburbs, saw the number of store closures rise from 1,242 to 1,385 (+143 stores). Expected increases in business rate valuations effective in 2017 and price inflation is likely to see this trend continue.

The East of England was the only region to see a increase in the number of multiples in 2016 (+2 stores). This was driven by the new Bond Street development in Chelmsford, which saw John Lewis open as well as several food and beverage outlets (e.g. Prezzo, Wagamama and Cote) and retail brands (e.g. Fat Face, Joules and White Stuff).

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

“Town and city centres have seen the loss of chain retailers for the last seven years so it is no surprise to see this trend continue. What is of concern, however, is the significant slow down in openings of chains on our high streets with many favouring out of town locations where large store formats, free parking and lower costs play to the all important consideration of convenience. Conversely, however, 2016 did see the opening of big store out of town formats coming onto the high street such as Topps Tiles, B&Q and DFS. Costs of operating a shop be it people, taxes and rents have started to rise putting the importance of the right location right at the top of every retailer CEO’s mind.

“The significant loss of stores in London and the South East reflects the trend for fewer stores in high population areas, to stores in destination locations where instore experience and adjacency to other non retailers, such as food, beverage and entertainment outlets, is what drives a successful shop.

“Leisure (food and beverage) outlets is the only business category that has seen growth in 2016 but this has also seen the significant slow down in openings which is perhaps a reflection of a bubble starting to burst after years of significant growth.”

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 66,807.
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 by day figure is the total number of closures divided by 366 i.e. 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