A combination of growth in online shopping, heightened restructuring activity and ongoing digitisation of services has seen the half-year net reduction in stores on Britain’s high streets reach record levels.
A net 1,123 stores disappeared from the UK’s top 500 high streets in the first half of this year with only 1,569 shops opening, compared to 2,692 closures.
This is compared to a net loss of 222 stores for the same period last year, according to research compiled for PwC by the Local Data Company (LDC).
The rate of store closures in H1 2018 remained at 14 stores a day. However, store openings were down by a third year-on-year.
Closures were most marked in categories affected by online shopping, with many independent jewellery retailers citing this, alongside high business rates, as a reason for closing their store doors.
Lisa Hooker, consumer markets leader at PwC, shares: “Our latest research highlights the challenges facing the retail and leisure sectors on Britain’s high streets.
“Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.
“The British high street is in urgent need of new ways of thinking and new forms of retail. Encouraging this should be a priority, and it remains to be seen if recent packages of support for the high street and reductions in business rates for smaller retailers will be sufficient to stimulate this.”
Zelf Hussain, retail restructuring partner at PwC, adds: “The transformation of the UK high street – both physical and virtual – raises questions about how legacy retailers and leisure operators should restructure and what new investment is needed.
“However, the intensity of the current climate means those questions often require immediate answers.
“The number of distressed businesses in 2018 has led to a spike in company voluntary arrangements. We believe that CVAs can be helpful restructuring tools, but alone are insufficient.
“Our own research of more than 101,710 companies listed on Company House shows that of the 65 retailers entering into a CVA between 1987 and 2017 more than half (51%) failed, leading to another insolvency process.
“With the impact of some recently announced CVAs yet to feed through, alongside the peak time period for new CVA announcements being the first quarter of the New Year, we should brace for more high street closures in the coming months.”