Independent store vacancy at seven-year high; convenience performs better  

The first half of 2023 saw a dramatic shift in the performance of independent retail sector in Britain, with net decline of 1,915 units, marking the largest net decline in independents in over seven years.

The report by the market researcher Local Data Company (LDC) noted that this figure is testament to the scale of the challenges faced by independent business owners, hit by the latest impacts of the energy crisis, high interest rates, staffing challenges and the end of business rates relief schemes.

“The picture for our independent retail and hospitality operators in the first six months of this year is unfortunately less positive, with a significant swing from record growth in the first half of last year to troubling net losses in the first half of 2023,” commented Lucy Stainton, commercial director at the LDC.

“As government support lessened and the energy crisis hit, we saw this disproportionally impact sectors like hairdressers and pubs.”

All retail classifications saw a year-on-year drop in net change in units in H1 2023, with comparison retail experiencing the greatest decline, with -1,132 units, followed closely by leisure with a decline of -1,100 units.

The top 10 list of fastest-growing subcategories in H1 2023 was dominated by the health & beauty, cafés & fast food and grocery retail sectors, which have proven relatively resilient in the current economic climate.

Barbers took the top spot with a net change of +304 units. Convenience retail continues to perform well, with supermarkets (+98 net units) and convenience stores (+62) making the top 10 for H1 2023.

Multiples have seen a loss of -2,085 units, although this represents the best result for the sector since H1 2017, as they were better able to offset the economic challenges, with the ability to fix energy prices with their suppliers for a longer term and absorb costs using various financial levers.

Overall, the report indicated high levels of activity across Britain’s retail locations in the first half of the year, despite the ongoing economic challenges for retail businesses and consumers.

Retail and leisure closures across GB reached 27,504 units, representing an 11 per cent year-on-year increase, but this was matched relatively closely by the number of openings, which reached 23,504, the second-highest recorded level of openings since H1 2014.

Retail parks were the only location type to record more openings than closures, with a net increase of 0.6 per cent units. High streets have faced challenges from high levels of churn in service and comparison retail, with a 0.7 per cent net decline in units and only a -0.1 per cent year-on-year decrease (improvement) to vacancy rate over H1 2023.

Shopping centre vacancy fell from 19.4 per cent in H1 2021 to 17.8 per cent in H1 2023, driven by rebased rents, reduced CVAs and administrations, and continued efforts to redevelop and revitalise former department store units.
“Challenges to the market in recent years have tested the staying power of even our best-loved chains. What resulted from the pandemic was a stress-tested and relatively resilient retail sector, which has helped to mitigate the effects of the latest economic headwinds,” Stainton said.

“Net closures for chains have reached their lowest level since 2017, which is a testament to the recovery efforts of retailers and landlords, and some sectors of the industry— particularly retail parks, food categories and supermarkets— have continued to strengthen.”