West Midlands badly hit by retail closures new data shows

SHOP closures in the West Midlands hit almost two a day in the first half of 2012 making it one of the worst affected areas in the UK in terms of retail decline, new data has shown.

Research compiled by PwC and Local Data Company shows the region lost 349 multiple retailer shop units in the first six months of the year.

Only Greater London, the South East and South West fared worse.

In the same period, chain store groups opened 189 stores in the region, giving a net closure total of 160.

Nationally, the research showed a net decline in the overall number of shops owned by multiple retailers for the second consecutive period – the net decline rose from -0.25% in 2011 to -1.4% in the first half of 2012. This is a net reduction of 953 shops, compared to 174 shops in the whole of 2011.

Overall, the number of multiple retailer shop closures in the UK reached on average, 20 stores a day in the first half of 2012.

Computer games, toy shops, clothes shops, gift shops, jewellers, card & poster shops and furniture shops were hose hardest hit. While, cheque cashing (payday loans), pawnbrokers, discount stores, convenience stores, coffee shops, bookmakers, bureaux de change and charity shops bucked the trend, showing growth during the period.

As the sector moves towards the key Christmas trading period, analysis of July and August shows the number of closures increasing to 32 per day.

Matthew Hammond, partner in business recovery services at PwC in the Midlands, said: “Many embattled retailers are suffering with under-performing retail locations. The insolvencies of Game, Peacocks and Clintons demonstrated this. Notably, each business survived and was rescued by the preferred, better-performing retail outlets.

“The legacy of a market where long leases were the ‘norm’ and many retailers were forced to accept inflexible terms and upward rent reviews, is now challenging their viability.  

“Growth for retailers was often achieved by increasing store locations, a model which in light of the changing buying and spending habits of the consumer, is reflected upon as over expansion. For large multiples, with mutual relationships with institutional landlords across a portfolio of outlets, it is possible to formulate a pragmatic, commercial approach to lease re-gearing.”