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Fifth consecutive year of growth in closure rate for chains in the South West

Feb 21, 2022

  • 1,546 closures and 615 openings in 2021 represents a net closure rate of 4.6%

  • Continues trend of rising net closure rate seen since 2017

  • Net disparity between openings and closures is 931

  • Location is a key driver of change

The net rate of closure for chain shops in the South West was 4.6% in 2021, with 1,546 shops closed and 615 opened, according to new analysis from PwC and The Local Data Company (LDC).

The South West’s net closure rate of 4.6% is below the mainland UK average of 4.7% and significantly below the rate of highly urbanised regions like London and the West Midlands, where changes to consumer behaviour brought on by the pandemic have been most disruptive. 

Tom Ayerst, PwC’s Senior Partner in the West, said:

“There’s no denying that trading conditions for retailers in the South West have been difficult for some time, and were exacerbated by the pandemic. But there are signs that vacancy rates have started to stabilise; hopefully, we have seen the worst of closures brought on by the pandemic.

“The South West has long been a place where independent retailers and businesses are supported and can thrive. They will look at the vacant premises in our shopping centres and on our high streets as opportunities for growth as we step into the post-pandemic world. Their creativity and novelty have the potential to revitalise our city centres.”

Location matters above all else

The increase in closures has been driven by changes to consumer behaviour: undeniably, Covid exacerbated the popularity of retail parks but even since restrictions lifted, footfall recovery has been much faster in out of town retail parks which benefit from easy access and good parking and were bolstered by car travel recovering more quickly than public transport. Moreover, shopping centres have been hit particularly hard by closures of fashion retailers, department stores and casual dining restaurant chains - and therefore less attractive destinations in their own right.

In 2021, across Great Britain, retail parks saw the smallest net change of any location (593), compared to high streets (4,287) and shopping centres (1,690). In percentage terms retail parks saw net closures of -4%, compared to high streets at -5% and shopping centres at -7%.  Retail parks have consistently outperformed shopping centres and high streets for the past 6 years. In the same time, shopping centres have gone from the second best performing locations, in 2015, to the worst performing locations in 2020 and 2021. 

The national picture

Over 10,000 chain store branches disappeared from Great Britain’s retail locations in 2021. In total, 7,160 shops opened, compared to 17,219 closures, a net decline of 10,059, according to PwC research compiled by the Local Data Company (LDC).  

Although the net change has worsened since 2020, the number of closures per day has remained stable, 47 in 2021, compared to 48 in 2020. 

The number of openings has declined 26% since 2019, the last year pre-pandemic. So, although there were over 7000 new openings in 2021, many of these were the natural churn and re-siting of existing stores. 

In a continuation of a long term trend, store closures peaked in 2020 in the height of the pandemic. The rate of closures has been growing since the mid 2010s, as more retail and service categories have shifted online. This had previously been offset by the rapid rollout of leisure operators, such as coffee shops, food-to-go and restaurants. However, such openings have slowed down rapidly since the mid 2010s.

In better news, the number of closures is now expected to slow down through 2022. The last two years have seen a shake out of some large fashion and department store chains who were on the brink of collapse. With these stores now closed, future store closures should begin to level off. Moreover, bigger chain retailers are more likely to be proactively negotiating with landlords, so the end of the rent moratorium in March 2022 is less likely to affect them.

Lisa Hooker, consumer markets lead at PwC, said:

“The last two years have been tumultuous for retailers but the closures we’ve seen are an acceleration of what was happening before the pandemic. Changes in consumer behaviour, changing patterns of working and the shift to online is impacting on both retail and service chain operators. 

“Location matters most to consumers and whilst city centres and shopping centres falter, retail parks and standalone operators have broad appeal. Multiple operators are taking note of this changing consumer behaviour and are relocating stores to where their customers need them to be. 

“Many of the CVAs and administrations that took place in early 2021 have now been captured, including department stores, fashion retailers and hospitality operators that have left gaps in city and shopping centre locations. There is a pressing need to radically reshape and even repurpose towns and city centres plagued by these empty units and shopfronts. To regain lost footfall, high streets must understand why retail parks are so attractive to consumers or look for ways to better serve local needs, encouraging independent retailers and entrepreneurs to take this opportunity to grow into the gaps that are emerging.”

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