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Monday 14 October 2019

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High Street exits remain at historic highs: PwC

Written by Peter Walker
10/04/19

The number of store openings by multiple retailers on Great Britain’s top 500 high streets has dropped by 17.4 per cent year-on-year, with the current rate of openings at nine stores per day.

This represents a 44 per cent decrease from the 16 stores per day opening in 2013, according to figures from PwC and The Local Data Company. The analysis tracked 66,463 outlets operated by multiple retailers in 500 town centres across Great Britain, between 1 January 2018 and 31 December 2018.

The shortfall between openings and closures reached its highest level since the beginning of the decade, as withdrawals from the High Street were further compounded by a historic low number of store openings.

Lisa Hooker, consumer markets leader at PwC, said that the results are clear – 2018 was a turbulent year for retailers with a number of high profile store closures. “We saw an acceleration in footfall decline on the High Street, with businesses continuing to see the impact of online shopping, increasing costs and subdued consumer spending.

“It’s interesting that the marked reduction in openings has accelerated the net closure trend,” she continued. “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 report suggested that the High Street of the future will be a more diverse space, not solely dependent on stores, demonstrated by 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.

On a category basis, only 15 out of 100 business types showed a net growth in outlets numbers, and only five categories showed net growth in double digits. Categories traditionally amongst the risers in previous years, such as coffee shops, food to go, takeaways, jewellers and beauty shops, all saw net declines in 2018 as overcapacity and economic conditions took their toll.

The roll-out of gyms leads the growth categories, as high streets begin to pivot away from retail; while other growth categories were dominated by entertainment and indulgence with bookshops, ice cream parlours and cake shops all in the top five.

Conversely, the top 10 declining business types were dominated by retailers and service businesses, most impacted by the shift to online. These include fashion and electrical retailers, many of which have lost share to prominent online retailers.

Looking at the first quarter of 2019, LDC data found that closure rates remain high, as 1,358 outlets alongside 849 openings. This is a direct consequence of Company Voluntary Agreements, store downsizing and administrations announced in 2018 feeding through across the country.

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.

"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,” he added.

Greater London saw the largest number of net closures across all the regions, with fashion retailers closing the most in the capital (down by 79 units). Scotland was the only region to see a drop in its net closures, dropping from -148 in 2017 to -119 in 2018. Wales was the best performing region, posting the lowest overall net decrease in chains of -59.

Lucy Stainton, head of retail and strategic partnerships at The Local Data Company, said that a key trend from this latest analysis is the increased loss in leisure units across the top 500 towns.

“However, there are still green shoots breathing life into this sector with brands trialling new grab-and-go concepts,” she noted. “Bricks and mortar has a strong future - but not as we know it - stores and shopping destinations will continue evolving to better serve consumer demand, integrating as part of an online channel.”


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