Even worse pandemic impact on retail likely warns report
News to dampen retailer enthusiasm for next month’s lockdown easing: if store closure numbers were bad last year, they're likely to get worse, a new report warns.
More than 17,500 chain stores and other venues closed in the UK last year, an average rate of 48 closures a day across England, Wales and Scotland, according to research by the Local Data Company for the accountancy firm PwC. That's the biggest decline on record as the Covid-19 pandemic caused widespread devastation.
And the figures, which include hospitality and leisure, don’t factor in independent retail closures. Also, the numbers only include store closures that are known to be permanent.
“Worryingly, the real impact of the pandemic is yet to be felt as some stores ‘temporarily closed’ during lockdowns, but considered as open in the research, are unlikely to return”, PwC warned.
Fashion retailers were among the worst affected, with more than 1,100 disappearing last year. Shopping centres also saw the largest proportion of their stores closed.
For the first time, London has been hit harder than other regions with a record increase in net closures this year. Together with the South East, they account for a third of the decline of all stores.
Centres of other major cities, including Birmingham, Bristol, Leeds and Newcastle, also experienced a decline in the number of chain stores of almost 8%.
The Local Data Company, which tracks vacancy rates in nearly 3,500 high streets, shopping centres and retail parks, recorded 17,532 closures in 2020. It also reported 7,665 store openings. This resulted in a net loss of 9,877 outlets, almost a third higher than in 2019.
However, the full impact of the pandemic has yet to be felt, according to Lisa Hooker, head of consumer markets at PWC, so the picture is likely to get worse before it gets better.
“The full extent will be revealed in the coming months as many of the [company restructures] and administrations in the early part of 2021 still haven’t been captured, including department stores, fashion retailers and hospitality operators that will leave big holes in city centre locations.
"Unfortunately, there is still quite a lot to play out. You've seen the closures of the likes of Debenhams and Topshop and that's happening in 2021 so they're not even in our numbers".
She added: “Much of the impact is a reflection of things that happened before the pandemic." As a result, closures were rising and openings were falling even before Covid hit, she noted.
Lucy Stainton, head of retail and strategic partnerships at the Local Data Company, also said: ”[This] really tells the story of changing consumer preferences and shifting demand. On the whole, flagship, city centre high streets and shopping centres saw a greater decline in chain stores versus more local markets and retail parks which proved to be more convenient and perceptibly safer”.
On a brighter note, PWC’s Hooker also believes that as we emerge from the pandemic there will be opportunities for the gaps to be filled.
"After the global financial crisis, we saw the growth of discounters and food service chains that replaced exiting retailers. There is an opportunity for operators who can find the right location at the right time, to thrive, even despite the current uncertainty.”
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