Multiple retailers across the UK closed 20 stores a day on average last year, according to new research published today.
The study by PwC and the Local Data Company paints a stark picture of the state of Britain’s high streets as the economy continues to bump along the bottom.
Mike Jervis, insolvency partner and retail specialist at PwC, said that 2012 saw more retail chains go into insolvency than ever before, and 2013 has seen the downward trend become even worse. The primary reasons why some retailers failed were the fact that many of them had excess numbers of stores and they failed to fully engage in multi-channel activity.
For the second consecutive year there has been a decrease in the number of chain stores in the UK’s top 500 town centres, and the net reduction in the number of stores climbed more than tenfold to 1,779 closures in 2012, from 174 closures in 2011.
There are no signs yet of the situation stabilising, as in recent months the pace of store closures has accelerated. According to PwC, an analysis of the period from December 2012 to February 2013 shows that the potential rate of closures – principally through administrations – increased to 28 per day.
Among the multiple retailers that struggled most in 2012 were those specialising in computer games, cards, health food and clothes, as well as recruitment agencies and travel agents.
Those that fared better and actually expanded their numbers included pound shops, cheque cashing services (payday loans), pawnbrokers, supermarkets, coffee shops and charity shops.
Matthew Hopkinson, director of the Local Data Company, believes that over the coming months further store closures are likely as more leases come up for renewal and as consumers increasingly demand “space that delivers an experience good enough to pull them away from their technology devices.”
“Will the discounters, pawnbrokers, charity shops, coffee shops and supermarkets continue to fill a large proportion of these closing stores? Town centres will have to adapt faster than ever before to maintain their attraction to consumers,” Hopkinson added.
Retailers need to make structural changes in how they do business, according to Christine Cross, chief retail adviser to PwC, who pointed out that today’s customer expects to be able to effect every part of the shopping transaction from any channel.