High street store closures on the rise as consumers feel the pinch

Store closures continued across Yorkshire and the Humber’s  high streets in 2017 with closures outstripping the number of stores opening as consumers responded to the changing retail climate and economic uncertainty.

According to PwC research compiled by the Local Data Company (LDC), which analysed the top 500 town centres in Great Britain covered 67,157 outlets run by retailers operating more than five outlets across the country, in 2017, 285 shops opened and 452 closed across Yorkshire & the Humber, a 13 per cent increase in the number of closures compared to 2016. This equates to a net decrease of 167 shops – a significant shift from 2016, where volumes were higher for openings (337) and lower for closures (398) and saw a net reduction of only 61 shops.

Not one town across Yorkshire & the Humber saw any positive net change during 2017, with the highest net reductions seen in Sheffield, Hull, Barnsley, Doncaster, Huddersfield, Grimsby and Rotherham.

There was some growth on the region’s high streets, with tobacconists, supermarkets, café/tea rooms, Italian restaurants and satellite televisions equipment & services amongst those growing at the fastest rate in 2017. The data also reveals that across multiple retailers in the 25 town centres analysed across Yorkshire & Humber travel agents, banks/other financial institutions, charity shops, fashion shops, and sports good shops were been amongst the hardest hit in 2017.

Table 1: Yorkshire & the Humber towns with the highest net reduction 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. Digital offerings are increasingly becoming make or break in areas like fashion, but also for banks, travel agents and estate agents – all of whom closed a significant number of high street stores last year. For these industries, store closures are less driven by the market environment and are instead part of much bigger structural changes happening, as customers increasingly expect to interact with their service providers online or via apps.

“We’ve already seen a tough start to 2018, but it’s important to remember the British high street still plays a vital role in society – and that there are elements of growth amongst the headline numbers of decline. For example, almost 400 new clothes and shoe shops opened last year, even though over 750 closed. And, while four pubs a week closed, at the same time three a week opened.

“The British high street is undoubtedly facing headwinds but retailers are waking up to the challenge and reimagining the future. The winners will be those who are agile and open minded in working out the best way to ensure their stores differentiate themselves and earn their place on the high street.”

Looking at the national picture, in 2017, 5,855 outlets closed on Great Britain’s high streets in 2017, at a rate of 16 stores a day. This is a slight increase on the 15 stores a day closing in 2016, when 5,430 outlets closed, making it the second consecutive year the number of closures have risen.

The number of new stores opening in 2017 fell to 4083, from 4534 in 2016. The data also shows that the second half of 2017 saw substantially more closures and less 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, as well as a slowdown in food and beverage growth as consumer confidence reached a four year low in December 2017. These findings equate to a net loss of 1,772 stores disappearing from Great Britain’s town centres in 2017.

Zelf Hussain, restructuring partner at PwC, said: “The end of 2017 was hard for UK retail and we’ve seen this continue into 2018, with the toughest first quarter of the year for the sector since the recession. We’ve seen some well known names impacted as they face a perfect storm of issues – a fall in consumer confidence and reduced spending alongside a number of cost headwinds.

“Many retailers are using restructuring tools as a way to resize their store numbers. Survivors and thrivers will be those who address their cost issues and have a compelling ‘bricks + clicks’ offering to help them meet changing consumer trends and compete with online retailers who don’t have the same legacy cost issues.”

Openings and closures of multiple retailers by region across the top 500 GB town centres in 2017

(Source: Local Data Company)