Multiple retailers closing in town centres

Multiple retailers closures accelerate to 20 stores a day on average across Britain’s town centres in the first half of 2012, says PwC and Local Data Company analysis.

• Toy shops, clothes shops, jewellers, card & poster shops and furniture stores all falling in numbers
• Discount stores, convenience stores, coffee shops, bookmakers and charity shops bucking the trend
• Multiple retailer closures in July and August reach 32 per day

From a net increase in 2009 of 1.2%, multiple retailers have for the second consecutive period shown a decline in their numbers, from -0.25% in 2011 to -1.4% in the first half of 2012. This is a net reduction of 953 shops in the first half of 2012 compared to 174 shops in the whole of 2011. Great Britain’s multiple retailers closed 20 stores a day on average across the country’s top 500 town centres in the first half of 2012, according to data compiled on behalf of PwC by the Local Data Company (LDC).

The data also revealed that across multiple retailers in 500 town centres computer games, toy shops, clothes shops, gift shops, jewellers, card & poster shops and furniture stores have been amongst the hardest hit in the first half of 2012. Cheque cashing (payday loans), pawnbrokers, discount stores, convenience stores, coffee shops, bookmakers, bureaux de change and charity shops bucked the trend showing growth during the first half of the year.

As we move into the latter half of the year, and towards the key trading period in the run up to Christmas, analysis of July and August 2012 shows that the number of closures has increased to 32 per day for these two months as a result of recent administrations and drawdowns.

Mike Jervis, PwC insolvency partner and retail specialist, commented: "All retailers in distress have too many locations. The insolvencies of Game, Peacocks and Clintons demonstrated this in spades.

“Relatively long leases, with inflexible terms, have been entered into in a growth phase of the economy which is no longer appropriate.

“Where over-expansion has already taken place, retailers need to face that reality and formulate a strategic plan in partnership with landlords, not in confrontation with them.

“There are sophisticated tools to analyse the extent to which sales from closed stores migrate to a retailer’s other locations. Properly managed, a large part of the lost sales can be regained.

“Retail is increasingly becoming a partnership between the store group, its suppliers and the owners of its locations. Like any partnership which falls on hard times, dialogue involving all partners is key.”

Matthew Hopkinson, director of the Local Data Company, concluded: “This rapid increase in the drawdown of the multiple retailers in the first half of this year is not unexpected. It also has some way to go as consumer spend remains low and the omni-channel environment requires fewer but larger and more ‘dynamic’ stores. The departure of so many larger stores is a major issue for many town centres, especially in secondary centres, where they have for many years been their high street’s anchors. A similar slowing in growth of the independents combined with this multiples drawdown has significant consequences beyond just driving vacancy rates up for many of these town centres.”