Published on April 11th, 2018 | by The GC Team0
Store openings at lowest level in seven years
Retailers increasingly feeling impact of acceleration in online shopping
Beauty product stores, speciality coffee shops, ice cream parlours and booksellers buck trend with net increase in stores
Fall in bank, estate agent and travel agent numbers reflects rising customer demand for online and apps
The number of new high street stores opening in 2017 fell to 4,083, from 4,534 in 2016, according to research compiled by the Local Data Company (LDC) for PwC.
The data shows that the second half of 2017 saw substantially more closures and fewer 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, and a slowdown in food and beverage growth as consumer confidence reached a four year low in December 2017 (Source: GfK).
5,855 outlets closed on Great Britain’s high streets in 2017, at a rate of 16 stores a day, a slight increase on the 15 stores a day closing in 2016, when 5,430 outlets shut. It is the second consecutive year the number of closures has risen.
The findings equate to an overall net loss of 1,772 stores disappearing from town centres in 2017.
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.”
Hooker added: “We’ve seen a tough start to 2018, but it’s important to remember the British high street still plays a vital role in society and there are elements of growth amongst the headline numbers of decline.
“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 offerings can’t compete with.”
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 re-occupancy and evolution of the use of space is most striking aspect of high street changes, 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.”
Stainton predicted “continued green shoots of growth” across almost all sub-sectors 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.”