An annual study on store closures and openings has returned record figures for 2020, but as expected the reading is not at all positive in the pandemic year.
Headline figures from a PwC research compiled by the Local Data Company (LDC) show a record net decline (-9,877), number of closures (17,532), and a new low in the number of store openings (7,655).
This is the worst ever seen with an average of 48 chain stores closing every day, and only 21 opening, the report noted. The findings starkly compare to five years ago in 2015, which saw net decline of just over 1,000, 50 per cent more openings and 25 per cent fewer closures than 2020.
“2020 has been an undeniably challenging and transformative year for the physical retail and leisure landscape and the acceleration of chain store closures seen in our latest research is unlikely to surprise many,” commented Lucy Stainton, head of retail and strategic partnerships at LDC.
Stainton thinks we have yet to see the worst of the damage caused by the Covid-19 pandemic. “These numbers only include store closures we know to be permanent and when government support schemes end, we expect a further increase in store closures before the picture starts to improve.”
A detailed look at the location of opening and closure activity tells the story of changing consumer preferences and shifting demand, she noted.
“On the whole, flagship city centre high streets and shopping centres saw a greater decline in chain stores versus more local markets and retail parks which proved to be more convenient and perceptibly safer. With this in mind we absolutely believe that after the short-term shake-out, there will be huge opportunity for acquisitive brands who are either looking to launch in different types of locations with new concepts or, take advantage of newly available space in their core markets.”
Retail parks have seen the smallest number of net closures of any location (453), compared to high streets (4,690) and shopping centres (1,791).
The drop off in high-street footfall has affected those multiple retailers located on high streets, particularly those in large city centres. However, this decline in multiples has been somewhat offset by growth in interest of local and independent operators, the report has found.
Another key take away from the report is the ‘mini-renaissance’ of the small towns, which have long been in decline at the expense of more populous areas and cities, with consumers now looking to shop in these locations, and larger retailers wanting to be there.
“For the first time, we’re seeing a widening gap between different types of locations: city centres and shopping centres are faltering, but certain retail parks with the right customer appeal are prospering,” Lisa Hooker, consumer markets lead at PwC, said.
“Location is more important than ever as we see a reversal of historical trends. For years, multiple operators have opened more sites in cities and closed units in smaller towns. As consumer behaviours and location preferences change, partly as a result of Covid-19, retailers are moving to be where they need to be. Small towns will remain important but we can expect recovery in cities as workers and tourists return, albeit in smaller numbers adopting more flexible working models.”
The best performing categories in retail sector include convenience, discount or essential operators, general merchandise value retailers that don’t typically sell online, and local services that need to be located nearby, such as tradesmen or repair shops. For leisure, ‘convenient leisure’ categories have grown through takeaways, cake shops and even coffee shops.
“The effect of Covid-19 is yet to be seen on most categories as much of the impact we’ve seen this year is a reflection of things that happened before the pandemic. The full extent will be revealed in the coming months as many of the CVAs and administrations in the early part of 2021 still haven’t been captured, including department stores, fashion retailers and hospitality operators that will leave big holes in city centre locations,” Hooker added.
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