More than 730 chain stores closed in Wales in 2020, with just 336 openings, continuing a trend that has developed across high streets in recent years.
According to the latest PwC research compiled by the Local Data Company (LDC), there are 15% fewer stores compared to 2016 as shoppers opt to shop online. The 736 closures do not include stores temporarily closed because of lockdown restrictions.
When openings are taken into account the net change in store numbers is -4.0% in Wales, marginally better than the 4.5% drop across Britain, which saw 17,532 closures compared to 7,655 openings.
It is, however, the only place across Britain where there are fewer chain stores closing than 12 months previously, albeit by just 0.2%. This is due to Wales’ retail destinations being less highly concentrated, offering more protection from closures.
Despite this blip, the trend across Wales has been downwards in recent years. In 2019, the year-on-year change was -4.2%, having been -3% in 2018, -2.1% in 2017 and -2.2% in 2016. Only the North East has fewer businesses, as at the end of Dec 2020, than Wales’ (9,724).
The result of the survey highlights the long-term impact of digital migration in the retail industry, but also how the full impact of the pandemic may not be felt yet given the extent of government support offered to businesses over the last year keeping many afloat.
The research looked at shops on the high street, retail parks, shopping centres, and standalones. Welsh shopping centres have taken the biggest hit of any of those shop types anywhere in Great Britain - a huge 10.2% drop or 94 closures in 2020.
Shopping centres are often poorly located for consumers who want to shop local and travel less to city centres, and are more likely to host fashion retailers and chain restaurants, which are the number one and thee most hard hit categories for net closure in 2020.
Welsh high street and retail parks suffered almost equally, down 5.1% and 4.9% respectively, while the number of standalone shops declined by 2%.
Across Britain, the net change on the high street was -5.7% with shopping centres at -7.1%, retail parks at 3.3% and standalones at 3.1%.
Meanwhile, the drop off in high-street footfall has affected those multiple retailers located on high streets, particularly those in large city centres. However, this decline in multiples has been somewhat offset by growth in interest of local and independent operators.
Jason Clarke, partner in PwC’s West and Wales practice, commented:
“The retail landscape continues to change and for Wales, as with the rest of Britain, this means fewer physical stores for people to visit. The impact on shopping centres in Wales has been particularly stark, with a percentage fall of shops in them greater than anywhere else across Britain.
“The picture these figures paint is only likely to get worse in 12 months’ time. The real impact of the pandemic is yet to be felt as some stores ‘temporarily closed’ during lockdowns, but considered as open in the research, are unlikely to ever welcome customers again.
“The full extent will be revealed in the coming months as many of the CVAs and administrations in the early part of 2021 still haven’t been captured, including department stores, fashion retailers and hospitality operators that will leave big holes in city centre locations. Retail and leisure operators must take action to ensure they are in the right places, so they’re not left surrounded by empty units and shopfronts.
“However, there will be big opportunities for growth into the gaps that are emerging. After the global financial crisis we saw growth of discounters and foodservice chains that replaced existing retailers. There is an opportunity for operators who can find the right location at the right time to thrive, even despite the current uncertainty.”
Ross Connock, Business Restructuring Service director for PwC’s West and Wales practice, commented:
“Government roadmaps across various parts of the UK are set to reactivate the high street. But it's going to look very different post- Covid as businesses will have to weather the twin impacts of permanently changed shopping and working environments.
“Companies must also run the gauntlet of rent payments and the eventual return of landlord enforcement powers and creditor winding up orders - all whilst trying to bankroll the costs of reopening, general operations, dealing with different regional rules and maximising revenues in what is set to be a fiercely competitive market.
“So although we are upbeat about a bounce back for the high street we will also see restructurings on the rise as companies look for sustainable solutions; PwC tracked 29 major CVA launches in the retail consumer hospitality and leisure sectors in H2 2020 alone vs 4 in H2 2019. More will follow in 2021 - alongside new tools such as the Restructuring Plan - as UK businesses simply aim to survive before they can flourish.”
Wales, PwC United Kingdom
Tel: +44 (0)20 7212 3678
Wales, PwC United Kingdom
Tel: +44 (0)29 2080 2447
Wales, PwC United Kingdom
Tel: +44 (0)7801 766188