Store Closures In UK Are At Their Lowest In Seven Years

According to new data, the number of chain stores closing in the United Kingdom has decreased significantly. Closures fell by one-third in the first half of 2022 compared to the same period last year, according to accounting firm PwC.

Shop openings remain below pre-Covid levels, but closures have reached a seven-year low. PwC said the pandemic’s shock had “eased,” but warned that high inflation would hit the retail sector.

The study was conducted in collaboration with the Local Data Company (LDC), which tracks over 3,000 locations in England, Wales, and Scotland, including High Streets, retail parks, and shopping centres.

“The good news is that we’re back on High Streets, there are more people out shopping and eating,” said Kien Tan, director of retail strategy at PwC.

“But the bad news is inflation hangs over us. It will affect shoppers in their pocket. But it will also affect businesses in terms of higher bills to pay. So there could be more closures to come,” said Tan.

The study includes businesses with more than five locations, ranging from retail and hospitality to gyms, banks, and hairdressers. It excludes independent merchants. More than 6,000 stores closed in the first half of this year, but the total is significantly lower than the previous year.

Store openings are still mediocre and well below pre-pandemic levels, resulting in a net loss of over 2,200 outlets. That is an average of 12 store closures per day, but it is the fewest net closures in five years.

The LDC’s commercial director, Lucy Stainton, described the trends as “hugely varied.”

“Although it has been over two years since the start of the pandemic, we are still yet to define our ‘new normal’ which is having a sustained impact on city centre locations, with many new openings being focused on smaller market towns and local High Streets as people continue to work from home.

“City centres are further hampered by both train strikes and airport travel disruption reducing tourist numbers,” she added.

More than 1,000 clothing stores closed in the first half of last year as the pandemic pushed a wave of big names, including Philip Green’s Arcadia group, over the edge. This time, betting shops, banks, and charity shops are suffering the most.

“Our High Streets are still changing quite dramatically and they will continue to evolve. Banking and betting can all be done online. Restaurant chains are actually back in growth for the first time in five years and that’s because we can’t replace that kind of eating and drinking at home,” said PwC’s Tan.

According to Nick Collins, CEO of hospitality company Loungers, changes in the property market are assisting his company’s growth. The company was founded in 2002 and currently operates two brands, Cosy Club and Lounge, which provide all-day cafe-bar and restaurant dining.

It now has 203 stores in England and Wales, with the most recent one opening three weeks ago in Canterbury, replacing a home and haberdashery shop.

“We’ve been looking at the city for four or five years. And we’re really pleased to be open,” Collins says.

As retailers have left, he has taken advantage of the opportunity to move in, securing sites that he would not have had a chance to secure a decade ago. Rents are usually lower as well.

“As banks and retailers like Dorothy Perkins have come out of the High Street, these units are prime pitch locations right in the centre of the High Street, benefiting from strong footfall going past all day and through the evening. That’s giving leisure operators like us a great opportunity.”

According to him, the company has grown from strength to strength, and he hopes to open around 30 smaller, regional locations this year. But, given the sector’s “cost-of-doing-business” crisis, do the economics still hold up? Energy bills that could be ruinous and a drop in discretionary spending could make this a bleak midwinter.

He believes Loungers is “well prepared” to weather the economic storm. For example, the company has long-term energy hedging contracts in place for its existing sites until 2024.

However, he is concerned about other, less well-capitalized businesses.

“It’s a very, very challenging time to be operating in the leisure sector at the moment. Most operators have seen a four, five-fold increase in their energy costs. And for many businesses, they won’t be able to survive that. ”

(Adapted from BBC.com)



Categories: Economy & Finance, Entrepreneurship, Geopolitics, Strategy, Sustainability, Uncategorized

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