The number of high street retailers closing their doors is at its lowest point since 2010.
This is great news for bricks-and-mortar stores around the country. However, some sectors are still seeing a net loss of stores.
Here, we’ll explore the state of our high street retailers in 2017 and discuss why certain sectors might be closing.
What’s the extent of closures among high street retailers?
Research conducted by the Local Data Company on behalf of PwC has given us great insight into our high street retailers. It tracked 67,521 outlets in 500 town centres to give a comprehensive view of the UK’s high streets.
In the first six months of 2017, 2,343 shops opened and 2,564 closed. This averages out at around 14 closures per day.
This shows a huge decrease in the overall volume of activity (openings and closures) for high street retailers. In fact, it’s fallen from a record-breaking 7,749 changes in 2010, to just 4,906 in 2017.
The net loss of stores has also reduced significantly. Just 222 stores have been closed, which is less than half of those lost in 2016 (503 stores closed). This is the smallest net decline since 2013, when only 209 more stores closed than opened.
It is thought that the low volume of activity and closures is down to a stable trading environment, and fewer companies becoming insolvent. PwC insolvency partner and retail specialist Mike Jervis said:
“The relatively low level of net closures in the first half of this year reflects a more stable environment, with consumer confidence proving more resilient than expected as the year unfolded. Historically the number of retail insolvencies has been a major factor in the volume of store closures. 2017 is on course to post the lowest level of administrations for more than a decade, with a favourable impact on overall store numbers.”
Which industries are affected?
Tobacconists, beauticians and coffee shops are growing at the fastest rate. However, with prominent chains such as Kaspa’s Creams and Ben & Jerry expanding their networks, ice cream parlours have also seen an increase.
Leisure chains (food, beverage & entertainment) have continued to thrive, rising from +57 stores opening in H1 2016, to +116 in H1 2017.
Sadly, the research shows that not all high street retailers have benefited from the same upswing.
Shoe shops, charity shops and women’s clothes shops are the hardest hit sectors. High street estate agents have also been affected. There was a net decline here of 36 units (78 openings, 114 closures).
So, what’s driving this change? We suspect online shopping is largely to blame.
The UK retail sector has higher online sales (as a percentage of total retail sales) than the United States or any country in Europe. So, it's no surprise that certain bricks-and-mortar stores are closing.
Shoe shops and women’s clothes shops are being replaced by online stores, such as ASOS and Missguided. Online property portals, such as Rightmove and Zoopla, have snapped up high street estate agents' customers.
As online technology improves, there is little doubt that more high street retailers will start feeling the pinch. As a result, we expect that the layout of British high streets will change dramatically in the future.
Companies will use customer patterns/behaviours to optimise their choice of location. Some stores will move solely online, others may disappear altogether.
PwC suggests that we will have a “leaner, fitter high street” as time goes on, making it an interesting time for high street retailers across the country.
If you own a high street store and are concerned about insolvency or your company’s future, then a CVA may be a good option. See our page on retailer rescue.
Opening and Closures