Pace of retailers shutting up shop remains steady

THE pace of retailers shutting up shop remains steady in the West Midlands, according to new data.

The study by PwC and the Local Data Company shows for the first six months of the year 239 shops closed in the West Midlands and 174 opened – a net reduction of 65. This represents 1.3 store closures per day in first half of 2015 compared with 1.5 stores closed per day in the same period in 2014.

Health food shops, jewellers, stationers and charity shops are all said to be thriving, while cheque cashing, fashion shops and shoe shops are all suffering.

The analysis took in 4,949 outlets operated by multiple retailers in 32 town centres across the region.

The closure of 239 outlets compared to 174 openings, represents a slight drop from the first six months of 2014, when 265 outlets closed compared to 198 openings – a net reduction of 67 shops,. This was higher than the whole of 2013, which saw a net reduction of 64 (536 closures, 472 openings).

Of the closures, the authors said the improving economy was sounding the death knell for many of the cheque cashing shops. Out of all the sectors these were hardest hit with 15 closures over the period and no new openings.

Birmingham had the highest net reduction in the West Midlands, which is unsurprising given its relative size, with 41 closures and 25 openings. This was followed by Leamington Spa, Hereford, Wolverhampton, Dudley and Solihull.

Table 1 (As tracked across 500 town centres in GB (Bi-Annually Researched Centres))

Sutton Coldfield, Kidderminster, Shrewsbury, Newcastle-Under-Lyme, Cannock and Redditch all had more store openings than closures.

Table 2

Andy Lyon, partner and retail specialist at PwC in the West Midlands, said:  “This latest data shows that changes are continuing to take place across the region’s town centres, but the pace at which closures are happening is slowing. The closures are caused by sector- specific factors: regulation is hurting money shops, the internet is hurting traditional bricks and mortar fashion chains.

“In Birmingham city centre during this period, we have seen the closure of the Pallasades, but it will be very interesting to see what the opening of Grand Central and reopening of the Mailbox has on high street trends over the next six months.

“The shifts in retailers’ store portfolios are a barometer for changes in society’s shopping habits. Closures in areas such as fashion shops and gift shops reflect the change in how consumers are spending and the increasing competition from online services.”
        
He said the tug of war between online and traditional shops, the so-called ‘clicks and bricks’ debate, had forced major changes on the high street not only for retailers, but for landlords too. The average unexpired length of a lease is now less than nine years compared to 22 years back in the early 1990’s. The renewal rate on leases is down to 9% in recent years, compared to 30% in the mid 2000’s.

“In the region, traditional shops continue to be replaced by leisure (food, beverage and entertainment) and services have continued to decline especially in the area of financial services. As leases come up for renewal and town centres continue to diversify then further changes are expected for the foreseeable future,” he added.
        
The region saw the largest number of openings outside Lomdon (612), South East (369) and South West (197). However, its net change of -65 was the highest anyne, equalled only by the North West. London’s net change over the H1 period was -63.

Matthew Hopkinson, director of The Local Data Company, said: “The results of the openings and closures of chains in our top 500 town centres in the first half of this year are encouraging. Closure rates are down and the gap between openings and closures is levelling out. This is as a result of wider consumer confidence, adjustments to market rents and most importantly a better understanding by chain retailers as to the role and opportunity that shops still have to play in the ‘total retail’ environment.

“As ever, the devil is in the detail. We are seeing the continuing decline of pubs and clothing shops whilst seeing previously expansive sectors such as banks, betting shops and cheque cashing all in retreat from the high street.”