North West high streets continue to struggle in testing retail climate as gap between closures and openings widens

LDC H1
  • Half-year net decline in stores see 1,234 British shops depart the high street, the highest level since the start of the analysis in 2010
  • North West high streets saw net loss of 75 stores in first half of 2019 – increase of almost 30 per cent year on year
  • In total, an average of 16 stores a day closed, as restructurings and the online migration of shopping and services continue to hit the high street
  • However, store openings rose by c.4% highlighting the potential opportunities for new entrants as well as established retail and leisure brands

Continued growth in online shopping, shift to in-home leisure and heightened restructuring activity has seen the half-year net reduction in stores on Britain’s high streets remain at record levels, according to research compiled for PwC by the Local Data Company (LDC).

The PwC/LDC analysis across multiple retailers in the top 500 town centres across Great Britain covered 67,586 outlets run by retailers operating more than five outlets across the country, found that in the first half of 2019, 98 shops opened and 173 closed across the North West, representing a 75-outlet net reduction across the region. An increase of almost 30 per cent compared to the same period last year which saw a net reduction of 58 stores.

Not one town centre across the North West saw a positive net change in the first half of the year with only Hale, Lythan St. Annes, Nantwich Road (Crewe) and Leigh experiencing no change at all in the net number of stores. The North West towns with the highest net reduction in H1 2019 were; Blackpool, Stockport, Kendal, Bolton, Liverpool and Manchester (see Table 1).

There was some positive growth across the regions’ high streets, with fashion shops, confectioners and supermarkets amongst the fastest growing in the first half of the year. The research also revealed that across multiple retailers in the 29 town centres analysed across the North West public houses, men’s clothes shops, bakers and games shops experienced the highest net fall in the number of outlets.  

Table 1: North West towns with the highest net reduction in H1 2019.

Town centre

Businesses Jan 2019

Businesses July 2019

Net change

Percentage fall

Openings

Closures

Blackpool

195

187

-8

4.1%

3

11

Stockport

184

177

-7

3.8%

2

9

Kendal

135

130

-5

3.7%

3

8

Bolton

195

188

-7

3.5%

6

13

Liverpool

630

623

-7

1.1%

29

36

Manchester

814

809

-5

0.6%

7

12

(Source: Local Data Company)

Neil McTiffin, PwC’s North West retail leader, said:

“Openings across the region quite simply aren’t replacing closures at a fast-enough rate, meaning that the sectors where consumers are comfortable with the price transparency and reliability of delivery options offered by digital players have felt the impact of the rise of online shopping the most.

“The reality for many of us is that we now prefer to shop online and increasingly eat, drink and entertain at home. As a result the high street is having to adapt to an overcapacity in retail and leisure space resulting from these channel shifts.

“The key for retailers and leisure operators across the North West is to continue looking at their businesses - including their store portfolios - to make sure they have a strong brand, product offering and essentially a clear proposition.”

Across Great Britain

A record net 1,234 stores disappeared from Great Britain’s top 500 high streets in H1 2019. In total, 1,634 shops opened, compared to 2,868 closures. The shortfall between openings and closures is the highest level since the LDC analysis began, as withdrawals from the high street and retailers restructuring their portfolios continued a-pace into the first six months of 2019.

Figure 1. Opening and closures of multiple retailer units, H1 2013 - H1 2019

LDC Graph 1

On a sector by sector basis, only 15 out of 96 sectors showed a net growth in store numbers, and all but two grew by only a single digit number of outlets: takeaways with a net increase of 26 outlets, and sport and health clubs with a net increase of 17. Meanwhile, the biggest net declines were seen amongst fashion retailers (-118), restaurants (-103), estate agents (-100) and pubs (-96). Categories traditionally amongst the risers in previous years, such as coffee shops, food to go, jewellers and beauty shops, have all seen slower growth rates or even decline in H1 2019 as overcapacity and economic conditions took their toll. (see figures 2 & 3).

Figure 2. Top 10 categories for store closures, H1 2019

LDC Graph 3

There was a slight increase in store openings in the first half of 2019 compared with last year (from 1,569 in 2018 to 1,634 in 2019), potentially indicating some renewed optimism amongst high street operators. Interestingly, seven of the top ten sectors for store openings also featured amongst the top ten sectors for closures, such as fashion.

Figure 3. Top 10 categories for store openings, H1 2019 

LDC Graph 2

Fashion retail continues to be the hardest hit sector, with 10 stores a week closing, mainly as a result of high-profile administrations, alongside CVAs and restructurings -particularly amongst major mid-market chains. While the decline in many service sectors are likely to continue, the fact that fashion and restaurant closures have been dominated by one-off administrations and CVAs, suggests that this decline may ease in the coming year.

Zelf Hussain, retail restructuring partner at PwC, said:

“A number of high-profile business administrations have contributed to the record net decline in high street store numbers, for example in fashion retail and casual dining. Several of these were in turn caused by a culmination of CVAs that reduced rents and store numbers but did not sufficiently improve the consumer proposition or cost structure of those brands.

“This reinforces our view that any business restructuring needs to happen alongside a wider programme of change. As we approach the key revenue period in the run up to the festive season - often make or break for many retailers - right-sizing store portfolios and wider cost bases will be crucial.

“But the PwC and LDC research also shows that successful operators are taking advantage of the current turmoil to either open stores that were not economically feasible in the past, or to move stores to better locations or to take advantage of lower rents. And it’s this nimbleness that will set apart winning retailers in years to come.”

Across the regions and nations...

Table 4. Openings and closures of multiple retailers by region across the top 500 GB town centres in H1 2019

 

LDC Graph 4

Greater London saw the largest number of net closures across all the regions, although it was right at the national average (-1.8%) when taking into account its overall larger number of units.

The East Midlands, North East, South East and Yorkshire and the Humber were the only regions to see a reduction in their net closures between H1 2018 and H1 2019.

Lucy Stainton, Head of Retail and Strategic Partnerships at The Local Data Company, said:

“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. 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.”

 

Neil McTiffin

Neil McTiffin, PwC North West Retail Lead

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