retail environment
Store closures slowing but multiples shy away from filling gaps
Over 10,000 chain store branches disappeared from Great Britain’s retail locations in 2021, according to a new report.
In total, 7,160 shops opened, compared to 17,219 closures, a net decline of 10,059, according to PwC research compiled by the Local Data Company (LDC).
Although the net change has worsened since 2020, the number of closures per day has remained stable - 47 in 2021, compared to 48 in 2020.
A decline was expected with the ongoing impact of the pandemic and as large retailers that were on the brink of closure at the end of 2020 completely exited the market. Meanwhile, Government support for chain retailers was mostly phased out in July 2021 adding pressure to those retailers reliant on grants.
The PwC research found the number of openings has declined 26 per cent since 2019 so, although there were over 7000 new stores in 2021, many of these were the natural churn and re-siting of existing stores.
In better news, the number of closures is now expected to slow down through 2022. The last two years have seen a shake out of some large fashion and department store chains who were on the brink of collapse. Moreover, bigger chain retailers are more likely to be proactively negotiating with landlords, so the end of the rent moratorium in March 2022 is less likely to affect them.
PwC found that consumer behaviour is continuing to drive the most change and the choice of shopping location is impacting the number of closures with retail parks and standalone sites being more insulated from closures.
Fast becoming a trend, retail parks have consistently outperformed other retail locations over the past six years and in percentage terms, they saw net closures of -4 per cent compared to high streets at -5 per cent and shopping centres at -7 per cent.
Undeniably, COVID exacerbated the popularity of retail parks but even since restrictions lifted, footfall recovery has been much faster in out-of-town retail parks which benefit from easy access and good parking and bolstered by car travel recovering more quickly than public transport.
Moreover, shopping centres have been hit particularly hard by closures of fashion retailers, department stores and casual dining restaurant chains.
Since the pandemic, city centres and London postcodes have seen an acceleration in net closures as more people work from home or adopt hybrid working patterns. London is again the worst performing region by some margin. Similarly, the underperformance of the city of Birmingham has caused the West Midlands to perform worse than the East Midlands, with towns in the East Midlands more sheltered from the surge of COVID closures. Many will be hoping that hosting the Commonwealth Games in the summer will see a reversal of fortune for Birmingham.
Lisa Hooker, consumer markets lead at PwC, said: “The last two years have been tumultuous for retailers but the closures we’ve seen are an acceleration of what was happening before the pandemic. Changes in consumer behaviour, changing patterns of working and the shift to online is impacting on both retail and service chain operators.
“Location matters most to consumers and whilst city centres and shopping centres falter, retail parks and standalone operators have broad appeal. Multiple operators are taking note of this changing consumer behaviour and are relocating stores to where their customers need them to be.
“Many of the CVAs and administrations that took place in early 2021 have now been captured, including department stores, fashion retailers and hospitality operators that have left gaps in city and shopping centre locations. There is a pressing need to radically reshape and even repurpose towns and city centres plagued by these empty units and shopfronts. To regain lost footfall, high streets must understand why retail parks are so attractive to consumers or look for ways to better serve local needs, encouraging independent retailers and entrepreneurs to take this opportunity to grow into the gaps that are emerging.”
