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Published on September 7th, 2021 | by The GC Team


Decline in store closures slows

New figures show that the decline in the number of stores slowed in the first half of 2021, with the overall net closure rate 750 lower than at the same point last year.

According to PwC research compiled by the Local Data Company (LDC), Government measures and pent-up post-lockdown demand provided some protection for the sector, despite the number of high-profile fashion and department store administrations early in the year.

Over 8,700 chain stores disappeared from Great Britain’s retail locations in the first six months of 2021.

In total, 3,488 shops opened and 8,739 closed, creating a net decline of 5,251.

Government support, in particular extended furlough and business rates relief until June 2021, enabled many operators to stay in business, while a rent moratorium has prevented landlords from evicting operators due to non-payment of rent or arrears. These measures have allowed stores to continue trading even where sites have been particularly hard hit by successive lockdowns.

Cities suffering more than towns

Despite the slowdown in net closures the flight from cities continues to contribute to the decline in multiple stores, with city centres now faring worse than commuter towns and villages (-4.3% vs -3.0% and -2.3%). Footfall in cities is yet to recover to pre-pandemic levels as more people work from home and, in the longer term, move towards a hybrid working model.

London is “a tale of two cities”, says LDA, with the City and West End declining faster than suburban areas which are supported by those working from home visiting their local high streets. In a reversal of fortune, London has gone from being the best performing region in 2016 (-0.9%) to the worst in 2020 & 2021 (-2.9%).

Regional performance has also reflected the higher number of closures in cities. For example, South East and East Anglia have been relatively protected, and have been amongst the most resilient regions in the past two years, as commuters have stayed close to home.

Meanwhile, longer lockdowns in Scotland and Wales last year meant that these regions fared worse in early 2021 than in 2020, with some store closures delayed until the current year, bucking the trend across Great Britain of slower closures.

Location type matters

The type of location continues to matter above all else across all regions. Retail parks have seen a smaller number of net closures (634), compared to high streets (3,643) and shopping centres (1,464).

Retail parks fared better as many are anchored by grocery, DIY and home furnishings retailers, categories that have outperformed others since the start of the pandemic. With Covid safety a key consideration people still appear to be more inclined to drive to retail parks to avoid using public transport and the larger units allow for better social distancing measures.

Many shopping centres by contrast, are often less conveniently located for consumers who want to shop locally and travel less to city centres; they are also more likely to host fashion retailers and chain restaurants, which are amongst the hardest hit categories for net closures over the past year. Meanwhile, the drop off in high-street footfall has affected those multiple retailers located on high streets, particularly those in large city centres.

Lisa Hooker, consumer markets lead at PwC, acknowledged the help of Government support and the resilience in consumer spending, but said the next six months will be a “make or break” for many chains, particularly with the reinstatement of full business rates for all but the smallest operators, the winding-down of furlough support and agreement yet to be reached between many operators and landlords on rent arrears.

“But the good news is that there are some green shoots of optimism,” she added. “Consumers still want a physical shopping experience and a number of chain stores and restaurants are opening. There is opportunity for operators who can be nimble, taking advantage of the current situation to either open new stores or to move stores to better locations.”

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