High street shops vanish in record decline

A net 2,481 stores vanished from Britain’s top 500 high streets during 2018 in a record depletion, according to the latest figures from PwC and the Local Data Company. It marks the first time that closures have exceeded the 2,400 mark. In total, 3,372 shops opened but the launches were offset by a raft of 5,833 closures, at a rate of 16 shops shutting per day. This compares with a net loss of 1,772 stores on the high street during 2017. In 2018, store openings by multiples dropped by 17.4% year-on-year, with rate of openings tallying nine per day. In 2013, the equivalent rate of openings was 16 per day. It therefore marks a 44% decrease. Lisa Hooker, consumer markets leader at PwC, said: “It’s interesting that the marked reduction in openings has accelerated the net closure trend. In categories as diverse as fashion and financial services, new entrants are able to gain share by launching online – enabled by technology and consumer adoption of mobile and e-commerce – rather than be saddled with the costs and risks of opening on the high street. “The high street of the future will be a more diverse space, not solely dependent on stores. The analysis reflects this with the net growth of gyms and sports clubs, ice-cream parlours and cake shops in addition to initiatives to bring more shared office spaces and homes into what were traditionally shopping areas. “However, it’s clear that the rate of openings is not currently enough to offset the closure of traditional retailers and services, so some tough decisions will need to be taken in the next few years.” The winners and losers The top categories that saw net increases in shops during 2018 were sports, gyms and health clubs; bookshops; ice-cream parlours; vaping and tobacco stores; and cake shops and patisseries. Categories traditionally posting rises in previous years, such as coffee shops, food-to-go outlets, takeaways, jewellers and beauty shops, have all seen net declines in 2018 as overcapacity and economic conditions took their toll. At the other end of the scale, the top 10 declining business types were dominated by retailers and service businesses, most impacted by the shift to online. These included fashion and electrical retailers, many of which have lost share to prominent online retailers. Store-based services such as banks, estate agents and recruitment agencies, whose business is also increasingly undertaken remotely, have also recorded heavy declines. These three categories alone accounted for a net 473 store reduction in presence on the UK’s 500 largest high streets in the past year. The report also observed a slowdown in leisure, in particular restaurants and pubs, with a net loss of 506 outlets. This reversed three years of consecutive growth since 2015. A dismal start During the first quarter of 2019, the Local Data Company found that 1,358 outlets closed alongside 849 openings, as a direct consequence of CVAs, downsizing and administrations announced in 2018. Zelf Hussain, retail restructuring partner at PwC, said: “Several national chains weathered company voluntary arrangements or administrations as retailers toiled in the tough climate of 2018. Retail companies looking to survive, let alone flourish, in 2019 face an uphill battle. “We have already seen several casualties in 2019 and there will undoubtedly be more, most likely in all categories except for groceries. Those retailers who will give themselves the best chance of survival must focus on having the relevant proposition, and the investments needed to deliver this proposition; the optimal mix of channels and business portfolio; flexible leases. “Additionally, we believe CVAs are not the answer in isolation. Companies need solutions that fully address customer needs, represent sustainable cost savings and, if needed, new money investment to bridge the lag between the cost of a restructuring and long-term performance improvements.” Geographical outcome Greater London saw the largest number of net closures across all the regions, with fashion retailers closing the most (79 units). Scotland was the only region to see a drop in its net closures, down from 148 in 2017 to 119 in 2018. Wales was the best performing region, posting the lowest overall net decrease in chains after shutting 59 units. Lucy Stainton, senior relationship manager, head of retail and strategic partnerships at the Local Data Company, said: “[Key] to note is that the two regions that were previously less susceptible to market challenges, Greater London and the South East, are now the two that have been hit hardest by store closures.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette