High street decline continues

Thursday 09 October 2014

The decline of the high street accelerated in the first half of the year as betting shops and discount stores gained increasing footholds at the expense of traditional retailers, figures showed today.

Town centres saw 406 net store closures compared to 209 in the same period last year, research from PwC compiled by the Local Data Company showed.

The collapse of businesses such as Phones 4u and lingerie chain La Senza saw this rise to 964 for the year to date at the end of September, two and a half times the number for the whole of 2013. Traditional goods retailers such as shoe and clothes shops saw a net decline of 365 in the first half while leisure chains - encompassing food, beverage and entertainment - grew outlets by a net 215.

The study of 500 town centres showed the impact of the "digital revolution" on high streets at a time when most retailers are seeing online growth far outstripping the performance of their stores. Matthew Hopkinson, director of the Local Data Company, said: "Significant changes are continuing to take place across Britain's town centres.

"Multiple retailers are continuing to close stores on high streets in favour of retail parks and shopping centres. The bad news is that the significant decline in chain retailer numbers in town centres seen in 2012, which then slowed in 2013, has picked up again."

There were 953 net closures in the first half of 2012. That period saw a peak of more than 20 store closures a day, falling to 18 a day a year later and 16 a day in 2014. But fewer stores opened in the first half this year meaning net closures compared to 2013 grew.

Analysis of the figures showed the changing face of the high street with betting shops, coffee outlets, banks, pound shops, charity shops and convenience stores on the rise, together with American-style eateries including diners and upmarket burger bars. But video libraries were wiped out while fashion retailers, building societies, pawnbrokers and mobile phone shops all suffered.

Mike Jervis, insolvency partner and retail specialist at PwC, said he expected chain retailers to continue taking a cautious approach to town centres with shorter-term leases and more temporary "pop-up" type formats.

"The overall drop in store openings may look surprising given UK growth prospects but at a macro level, it is most influenced by shifts in retail business models from purely high street to multi-channel," he said "The expanders are still the charity shops, the discount stores and supermarket convenience outlets."

Mark Hudson, retail leader at PwC, said: "This data shows that we are now really starting to see the full effects of the digital revolution and consequent change in customer behaviour play out on the high street. Although the rate of growth of online sales is slowing, it still far outstrips store sales growth for most retailers, from a much higher base.

"This, combined with the advances in mobile technologies and smartphones, is only going to accelerate the channel shift. We're heading for a high street based around immediate consumption of food, goods and services or distress or convenience purchases. I'm not sure that's what customers really want - but consumer and business economics are pointing in that direction at the moment."