Great Britain lost a net total of almost 10,000 chain stores in 2020 as more shoppers worked from home and bought online, new research suggests.
Research from PwC and the Local Data Company found that 17,532 shops closed, as 7,655 opened - a net decline of 9.877. On average 48 chain stores closed every day while 21 opened.
To put the figure in context, just five years ago, an equivalent study reported a net decline of just over 1,000 new shops, as 50% more opened and 25% fewer closed.
The findings suggest that city centres are now faring worse than suburbs and commuter towns, and that shops in shopping centres have been twice as likely to close as retail parks – as more people work from home during the pandemic. Shopping centres, finds the study, are more likely to house retailers whose business can easily be done online, such as fashion or chain hospitality businesses that have overexpanded and are now in difficulty. But footfall has held up at retail parks, which have seen the smallest number of net closures of any location.Those anchored by essential retailers or non-online categories, such as grocery or discount, have fared better, finds the study, than those anchored by fashion or leisure retailers. Local high streets have prospered, and many are now keen to support the local and independent retailers that have prospered during the pandemic.
Lisa Hooker, consumer markets lead at PwC, says: “For the first time, we’re seeing a widening gap between different types of locations: city centres and shopping centres are faltering, but certain retail parks with the right customer appeal are prospering.
“Location is more important than ever as we see a reversal of historical trends. For years, multiple operators have opened more sites in cities and closed units in smaller towns. As consumer behaviours and location preferences change, partly as a result of Covid-19, retailers are moving to be where they need to be. Small towns will remain important but we can expect recovery in cities as workers and tourists return, albeit in smaller numbers adopting more flexible working models.”
She says the full force of closures is yet to come, with many CVAs (company voluntary arrangements) and administrations taking place in early 2021 but yet to be felt.
Zelf Hussain, retail restructuring partner at PwC, says: ““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.”
Lucy Stainton, head of retail and strategic partnerships at The Local Data Company, says that only 17% of shops were classed as essential and thus able to trade through lockdowns. Other ‘essential’ shops chose to close temporarily because local footfall was so low.
“Looking at where this opening and closure activity has predominated really tells the story of changing consumer preferences and shifting demand,” she says. “On the whole, flagship city centre high streets and shopping centres saw a greater decline in chain stores versus more local markets and retail parks which proved to be more convenient and perceptibly safer. With this in mind we absolutely believe that after the short-term shake-out, there will be huge opportunity for acquisitive brands who are either looking to launch in different types of locations with new concepts or, take advantage of newly available space in their core markets.”
The study tracked 208,056 outlets operated by retailers with at least five outlets. The Local Data Company visited 3,496 high streets, shopping centres and retail parks across Great Britain, visiting premises and recording their occupancy status as occupied, vacant or demolished on the day of the visit.
Commenting on the research, Rob Shaw, managing director EMEA at Fluent Commerce, says: “Retailers and consumers alike have a massive desire to get back to normal. Consumers will still want to physically see products, socialise and have the ‘experience’ of shopping. I don’t see this changing and in fact, Generation Z consumers are more likely to favour this type of retailing. What will change, however, is the footprint and layout of stores to provide a welcoming environment for shoppers to browse and checkout safely. I think we will see a metamorphosis of in-store staff at the end of this. It will take investment of retailers into their staff and they will have to adjust the value they place on store staff as a more comprehensive skill set is required."