16 shops close every day on High Street: PwC
Written by Hannah McGrath
Around 16 shops are closing every day as the UK High Street continues to battle the shift towards online shopping and the rising cost of physical store space, according to a new report from PwC.
A net 1,234 shops disappeared from Britain’s top 500 High Streets in the first half of 2019, according to the professional services firm, taking the gap between store closures and openings to a record high as leading retailers resort to restructuring plans.
Net store closures in the first six months of 2019- the amount of closures compared to new store openings- were up 6.5 per cent from 1,123 in the same period last year, and now stand at the highest since PwC’s survey began in 2010.
The total of closures for the first half of 2019 stood at 2,868 store closures, equivalent to 16 per day and the most for five years.
Fashion retailers were hardest hit by the decline of footfall with 262 total store closures and 118 net closures, as consumers take their shopping onto digital channels.
The analysis highlighted that the closures appeared to have been heavily driven by administrations, rather than Company Voluntary Arrangement (CVAs), an insolvency mechanism enabling stores closures and rate reductions launched by the likes of Debenhams, Philip Green’s Arcadia Group and Monsoon.
The report noted that several administrations came after CVAs, suggesting that many CVAs are unsuccessful.
PwC warned: “With several fashion retailers using CVAs to rationalise their estate and others currently seeking CVA approval, fashion will likely see more closures in the second half of the year.”
Looking at individual retail sectors, only 15 out of 96 sectors showed a net growth in store numbers, with just two of these sectors growing by double figures.
The biggest net declines after fashion retailers were restaurants (-103), estate agents (-100) and pubs (-96).
Even categories that have seen good growth in recent years - such as coffee shops, vape shops and beauty salons - have seen slower growth rates or decline as market saturation and economic conditions take effect.
Lisa Hooker, leader of industry for consumer markets at PwC UK said: "The good news is that there are green shoots as new entrants are even entering embattled sectors such as fashion. Consumers still want to spend their money in well-located and invested stores and leisure venues on the high street.”
However, despite the bleak outlook, PwC identified “green shoots of optimism”, with the number of store openings across the retail sector increasing marginally from last year to 4.1 per cent, with smaller brands and franchises seeing opportunities in categories that have experienced heavy closures from nationwide chains.
“Nimble retailers are re-siting their stores to take advantage of vacant space and new opportunities in better catchment areas,” the report stated.
In the same vein, while many fashion retailers are closing, others are opening, the reported stated, with 144 store openings in the first half of 2019, hinting at a potential revival for retailers who tap into the demand for customer experience in physical stores.
The report concluded: “Existing operators need to fundamentally question the role of their high street outlets, how many they should have, where they should be, and for what purpose, and they need to do this fast.
"Equally, as the internet has removed the need for consumers to transact physically, for both goods and services, the reality is that fewer high street outlets will be needed in the future, and that space may be used very differently to today."
Commenting on the findings, Mike Callender, executive chairman at REPL Group said: “Bricks and mortar stores must stop seeing online retailers as direct competitors, and start looking at what they’re doing right to learn from their successes."
He added:"High street stores already have a big advantage as, particularly with expensive items, people want to touch and feel the products which they are unable to do with VR or online. However, they’re failing to capitalise on the assets available to them and instead look to activities such as discounting to try and increase profits"