High street store closures increase by a quarter across the North West in 2017, says PwC and The Local Data Company

Retail store closures continued across the North West’s high streets in 2017 as closures outstripped the number of store openings as consumers responded to the changing retail climate and the continued economic uncertainty, according to PwC research compiled by the Local Data Company (LDC).

The analysis of the top 500 town centres in Great Britain covered 67,157 outlets run by retailers operating more than five outlets across the country, found that in 2017, 340 shops opened and 515 closed across the North West, a 25 per cent increase in the number of closures compared to 2016. This equates to a net decrease of 175 shops – a significant shift from 2016, where volumes were lower and saw 333 outlets opened and 410 closed with a net reduction of 77 shops.

Only two town centres in the North West saw a positive net change in 2017, they were Altrincham and Lytham St. Annes. The North West towns with the highest net reduction in 2017 were; Manchester, Blackpool, Chester, Liverpool, Oldham, Stockport, Carlisle, Barrow-in-Furness and Burnley - (See Table 1).

There was, however, some growth on the region’s high streets, with health clubs, satellite televisions equipment & services, beauty products, camping goods/outdoor wear, sports goods and coffee shops amongst those growing at the fastest rate in 2017. The data also reveals that across multiple retailers in the 29 town centres analysed across the North West travel agents, fashion shops, bookmakers, estate agents and charity shops were been amongst the hardest hit in 2017.

Table 1: North West towns with the highest net reduction in 2017.

Town centre

Businesses Jan 2017

Businesses Jan 2018

Net change

Openings 

Closures

Manchester

837

808

-29

57

86

Blackpool

216

205

-11

11

22

Chester

352

341

-11

25

36

Liverpool

630

620

-10

55

65

Oldham

157

148

-9

7

16

Stockport

193

184

-9

10

19

Carlisle

208

199

-9

10

19

Barrow-in Furness

133

124

-9

4

13

Burnley

141

132

-9

11

20

(Source: Local Data Company)

Lisa Hooker, consumer markets leader at PwC, said:

"2017 was tough for the British retail industry, particularly the second half of the year. We saw volatility from month to month, and across different sectors as wage growth failed to keep up with inflation - forcing many shoppers to think more carefully about their spending habits. 

On top of this, many retailers are increasingly feeling the impact of the acceleration of online shopping as consumers begin to feel more comfortable with the price transparency and reliability of delivery options offered by online players. Digital offerings are increasingly becoming make or break in areas like fashion, but also for banks, travel agents and estate agents – all of whom closed a significant number of high street stores last year. For these industries, store closures are less driven by the market environment and are instead part of much bigger structural changes happening, as customers increasingly expect to interact with their service providers online or via apps.

We’ve already seen a tough start to 2018, but it’s important to remember the British high street still plays a vital role in society – and that there are elements of growth amongst the headline numbers of decline. For example, almost 400 new clothes and shoe shops opened last year, even though over 750 closed. And, while four pubs a week closed, at the same time three a week opened.

Retailers and leisure operators need to continue looking at their businesses - including their store portfolios - to make sure they have a clear brand and product offering. The winners at the moment, such as nail bars, coffee shops, bookstores and craft beer pubs, are all flourishing because they serve the needs of emerging consumer segments, such as experience-seeking millennials and offer a differentiated physical proposition that online can’t compete with.

The British high street is undoubtedly facing headwinds but retailers are waking up to the challenge and reimagining the future. The winners will be those who are agile and open minded in working out the best way to ensure their stores differentiate themselves and earn their place on the high street.”

Across Great Britain

In 2017, 5,855 outlets closed on Great Britain’s high streets in 2017, at a rate of 16 stores a day. This is a slight increase on the 15 stores a day closing in 2016, when 5,430 outlets closed, making it the second consecutive year the number of closures have risen.

The number of new stores opening in 2017 fell to 4083, from 4534 in 2016. The data also shows that the second half of 2017 saw substantially more closures and less openings than the first six months of the year, reflecting a tough trading environment including a slowdown in consumer spending, rising staff and business rates costs, as well as a slowdown in food and beverage growth as consumer confidence reached a four year low in December 2017 (Source: GfK). These findings equate to a net loss of 1,772 stores disappearing from Great Britain’s town centres in 2017.

Figure 1. Opening and closures of multiple retailer units, 2013-2017

 

openings and closures graph

Source: Local Data Company)

Zelf Hussain, restructuring partner at PwC, commented:

"The end of 2017 was hard for UK retail and we've seen this continue into 2018, with the toughest first quarter of the year for the sector since the recession. We've seen some well known names impacted as they face a perfect storm of issues - a fall in consumer confidence and reduced spending alongside a number of cost headwinds.

"Many retailers are using restructuring tools as a way to resize their store numbers. Survivors and thrivers will be those who address their cost issues and have a compelling 'bricks + clicks' offering to help them meet changing consumer trends and compete with online retailers who don't have the same legacy cost issues."

Table 2. Openings and closures of multiple retailers by region across the top 500 GB town centres in 2017

 

Country/

Number of store openings

Number of store closures

 

2017 net change

English Region*

East Midlands

271

399

-128

East Of England

297

481

-184

Greater London

1,118

1,454

-336

North East

116

216

-100

North West

340

515

-175

Scotland

142

290

-148

South East

713

898

-185

South West

359

511

-152

Wales

104

157

-53

West Midlands

338

482

-144

Yorkshire and the Humber

285

452

-167

Total

4,083

5,855

-1772

(Source: Local Data Company)

London saw the greatest number of net closures (-336), with this region being hardest hit by the business rates reassessment and a degree of saturation in the London casual dining market.

Lucy Stainton, Senior Relationship Manager (Retail), The Local Data Company, said:

“There is of course no doubting that we are experiencing a period of great change in retail, and the question around the relevance and role of stores is still very much on the industry agenda. LDC’s latest figures show that there continues to be a vast amount of churn across the physical landscape and, whilst the gap between openings and closures has widened slightly in 2017, we are seeing certain sub-sectors really gain traction.

It is this ‘re-occupancy’ and evolution of the use of space which is most striking, as banks become coffee shops, pubs change to nurseries and nail salons open in the space vacated by fashion shops. In 2017, the sub-sectors with the highest growth rates largely have ‘experience’ in common, as consumers are still very social and want to engage with their high streets and physical space in a way which perhaps replaces traditional shopping activities, some of which has moved online. Likewise, these corners of the retail landscape play well for consumers looking for more affordable luxuries as consumer uncertainty persists and spending remains of a cautious nature.

It is also interesting to note that despite the onslaught of digital and audiobooks, readily available via the likes of Amazon and Apple, booksellers are on the list of 2017 ‘risers’. Perhaps unexpected but then again does this suggest there is hope for more traditional retailing of physical products, if done well.

For 2018 we predict there will be continued green shoots of growth across almost all sub-sectors, visible beneath the headline trends, as newer entrants and younger brands take this ‘shake out’ as an opportunity to pick up available property. Businesses with a relevant proposition and a strong understanding of their customer can absolutely still thrive in the right locations. Equally more established brands who continue to tweak their offer and innovate on the way through will no doubt see positive results and retain their valued place on our high streets.”

Lisa Hooker

Lisa Hooker, Consumer Markets Leader at PwC

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