High Street Chain Closures Increasing
But Independent Reatilers seem to be on the increase…
With high profile news about chain stores like Comet, Blockbuster, HMV and Jessops closing over recent months, it will come as no surprise that research has found that the numbers have increased over the past year.
The rate of closures accelerated in the last 3 months of 2012 as a succession of high street giants went into receivership, increasing the figure to 28 stores shutting every day between October and December.
The decline in particular store types involved gift shops, which were down by 60%, computer games retailers, down 45%, health food stores, which were reduced by 24.7% and card shops, of which just over 23% closed.
Whilst some retailers have been in decline others have taken their place. Payday loan shops have seen the biggest boom with an increase of 20%, followed by pawnbrokers and discount stores, both up by 13%. Supermarkets have increased their foothold back in the high street with an increase of 3.6% with coffee outlets, betting and charity shops also on the increase.
Speaking about the increased rate of closures, Mike Jervis, insolvency partner and retail specialist at PwC, pinpointed the issues faced by troubled retailers:
“The failed chains generally shared two problems – too many stores and too little multi-channel activity. A number of them had failed to deal with their underlying issues by hiding behind light touch restructuring processes, especially Company Voluntary Arrangements. 2013 has seen the downward trend become even worse.”
In 2011 the net number of store closures was just 174. Last year that net figure had increased to 1,779 shops with 7,337 closures and only 5,558 new stores taking their place.
Regionally, the south east of England was the hardest hit with a net decrease of 376 shops lost. Scotland fared better with just a 77 net loss of shops and Wales lost 65 retail units.
Mike Jervis of PwC had a few words of advice for retail businesses, adding:
“If underperforming retailers are to avoid becoming part of these statistics for next year, their shopping baskets should contain an acute knowledge of their customers and their customers’ needs; robust cashflow planning; honest analysis of the performance of existing and potential new stores; the bravery to admit mistakes regarding products and stores before dealing with them; clinical attention to costs; early engagement with banks, landlords and suppliers; appropriate debt and capital structures.”
The bright side of "multiple shops" closing has been reported by the Local Data Company as the replacement of chains by independent retailers.
According to LDC independents grew at a rate of 2.4% in 2012, three times more than the chains.
Specific data reveals that "Nail Bars" lead the growth with an increase of 16.5%. Fashion stores, auto parts and pet shops were also on the up with chairty outlets and pound shops also being opened by independent storekeepers.