Testing Times for Great Britain’s High Street
According to PwC research released today (9th November 2018) compiled by the Local Data Company (LDC), the British High Street has seen store closures reach record levels. The latest research reveals:
- Largest half-year net decline in stores
- Store openings at a record low due to lack of confidence in the high street
- Rate of store closures remains high as growth of online shopping in-home leisure and restructurings take their toll
A combination of the growth in online shopping, shift to in-home leisure, heightened restructuring activity and continued digitisation of services has seen the half-year net reduction in stores on Britain’s high streets.
A net 1,123 stores disappeared from Great Britain’s top 500 high streets in the first half of the year as only 1,569 shops opened, compared to 2,692 closures (H1 2017 net loss: -222 stores).
Relative to the first half of 2017, the rate of store closures in H1 2018 remained at 14 stores a day. These closures were most marked in categories affected by online shopping (e.g. fashion stores, electrical outlets) and increasing consumer preference for in-home leisure. The shift to in-home leisure has particularly impacted pubs – and a restaurant sector dealing with cost inflation and oversupply after rapid expansion in 2016/2017.
Breakdowns showed restaurant, catering and entertainment chains saw a net loss of 340 stores after net rises in H1 2016 and 2017. Other leisure categories such as bars and bookmakers were just outside the top five faller categories.
Lisa Hooker, consumer markets leader at PwC, said:
“Our latest research highlights the challenges facing the retail and leisure sectors on Britain’s high streets. The continued rate of store closures reflects the new reality of that many of us prefer to shop online and increasingly eat, drink and entertain at home. The high street is adapting to an overcapacity in retail and leisure space resulting from these channel shifts.
“Openings simply aren’t replacing the closures at a fast enough rate. Specifically, the openings across ‘experiential’ chains, such as ice cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories.
“Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures in H2 due to administrations and CVAs already announced will further intensify the situation.
“The British high street is in urgent need of new ways of thinking and new forms of retail. Encouraging this should be a priority. However, it remains to be seen if recent packages of support for the high street and reductions in business rates for smaller retailers will be sufficient to stimulate this.”
In addition to the closures in the retail and leisure sectors, many traditionally store-based service businesses, such as banks, estate agents, recruitment agencies and travel agents, have continued to move online, albeit their rate of closure has slowed as fewer of these types of businesses remain on the high street.
Those four categories accounted for a net 130 store reduction in presence on the UK’s 500 largest high streets in the first half of the year.
Greater London saw the largest number of net closures across all the regions, with leisure making up nearly half of the net closures in the capital in H1 2018 (Leisure: -128 units). Wales was the best performing region, seeing the lowest overall net decrease in chains of -22.
Jenny Holloway CEO of Fashion Enter Ltd added: “High Street retail is not dead; it’s just morphing into something different! Consumers need to be enticed by in-store ‘experiences’ and ‘newness’ of product. Retailers need to rethink what they offer and move quickly. That’s why as a company we believe that retailers need to be nimble in terms of production and what they provide on the shop floor.
“In 2019 we will be launching a new retail concept in London with our up-and-coming designers that won’t be replicated anywhere else. By being responsive to changing consumer demands manufacturers have a unique place in fashion today. We can be the very backbone for retailers providing newness in just 3-4 weeks for new styles and for repeats just two-weeks. Time to rethink the retail business model in line with changing consumer habits.”