Retail industry is “re-setting” with significant shop opening and closure churn

Bike shop closures tend to make more headlines than bike shop openings, but the UK’s high streets are displaying signs of “re-setting”, according to new stats from the Local Data Company (LDC) and PwC. The latest set of store closure numbers focus on chain stores (including Evans Cycles) and show a record level of store closures with a net decline of 1,234 chain stores on Britain’s top 500 high streets (1,123 in H1 2018).

However, the LDC noted the huge level of opening/closing churn under the surface, strongly suggesting the retail industry in re-setting itself to handle the change in needs and demands from consumers.

The first half of 2019 saw almost twice as many store closures (16 per day) as openings (9 per day). In total, 1,634 stores opened and 2,868 stores closed over the period.

The same period saw an increase in the number of stores being opened (circa 4%).

“One of the most striking things about this latest Local Data Company and PWC analysis is the level of market churn identified in such a short space of time,” said Lucy Stainton, Head of Retail and Strategic Partnerships at Local Data Company. “Whilst the overall net change number, a loss of 1,234 occupied units in only six months, is certainly significant, the level of openings and closures activity beneath this is hugely notable as the industry continues to re-set.

“In our experience, retailers are being that much more cautious and risk averse as far as both planning for new store openings and in making decisions across their existing property portfolios.

“The reality is that UK retail space will continue to look very different over the coming years, and this is demonstrated by the sheer number of stores opening and closing on an ongoing basis.”

While the high opening rate may give some cause for optimism, the high street is struggling. Vacancies are at their highest rate in four years, with the online migration of retail usually named the chief cause – one report indicates half of retail sales will be online within the next 10 years.

Lisa Hooker, consumer markets leader at PwC, said: “While retailers need to keep investing to make sure their stores and propositions are relevant to today’s consumers, it’s also critical that all stakeholders find ways to ease the burden on operators, keep investing in the high street, and encourage new and different types of operators to fill vacant space.

“The good news is that there are green shoots, as new entrants are entering even embattled sectors such as fashion. Our research tells us that consumers still want to spend their money in well located and invested stores and leisure venues on the high street.

“However, as consumers continue to change the way they shop and spend their leisure time, the reality is that we may need fewer high streets in the future. This opens up opportunities to repurpose high street space for other uses, while the remaining space evolves to meet consumer demand for convenience, choice and experience.”