Multiple retailers’ store closures average 20 a day in 2012, finds PwC and LDC

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Multiple retailers’ store closures reached 20 a day on average across the UK’s top 500 town centres in 2012, according to new analysis by PwC and the Local Data Company. 

From a net increase in 2009 of 1.2%, multiple retailers have for the second consecutive year shown a decline in their numbers from -0.25% in 2011 to -2.7% in 2012. Year on-year, the net reduction in the number of stores climbed more than tenfold from 174 shops in 2011 to 1,779 shops in 2012, said researchers. 

The data also revealed that across multiple retailers in 500 town centres card, computer games, clothes, banks, health foods, jewellers, travel agents, recruitment agencies and sports goods shops have been amongst the hardest hit in 2012. Pound shops, pawnbrokers, charity shops, cheque cashing (payday loans), betting shops, supermarkets and coffee shops bucked the trend showing growth during the year.

Analysis of the three months between December 2012 and February 2013 shows the potential rate of closures – principally through administrations – would accelerate to 28 per day for this period.

Mike Jervis, insolvency partner and retail specialist, PwC said: “2012 saw more retail chains go into insolvency than ever before. 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.

“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.”

Risers Net Change (Units) Net Change (%) Fallers Net Change (units) Net Change (%)
Cheque Cashing/Payday Loans 121 20.0 Card & Poster Shops -188 -23.4
Pound shops 99 13.0 Computer Games -176 -45.0
Pawnbrokers 89 13.2 Women’s  Clothes Shops -175 -7.2
Charity shops 87 2.7 Recruitment Agencies -154 -15.1
Betting Shops 77 3.3 General Clothing -120 -8.7
Supermarkets 62 3.6% Health Foods  & Products -119 -24.7
Coffee Shops 58 3.4 Banks & Financial Institutions -112 -2.9

Table 1. Top risers and fallers by business type in 2012 (Source: Local Data Company)

Christine Cross, chief retail adviser to PwC, said: “Although the figures are more disappointing than many had hoped, we have to acknowledge several of the companies with closures had anticipated these for some time. What is surprising is the speed at which stores have been picked up by value and grocery retailers in particular. Good businesses with good operating models and good people don’t fail.

“While rates remain high, there is still a need for retailers to address cyclical cost increases and, even more, structural changes in ways of doing business. Today’s customer does not differentiate between where they heard about, researched, saw, purchased or returned a product. They expect to be able to effect every part of the shopping transaction from any channel. This is the age of the total retail experience and it demands a very different operating model to be successful.”

Across Great Britain

Openings and closures of multiple retailers by region across the top 500 GB town centres in 2012

Country/ Number of store closures Number of store openings 2012 change 2011 Change
English Region*
East Midlands 584 419 -165 4
East Of England 512 344 -168 -9
Greater London 1,281 1,180 -101 -101
North East 291 240 -51 -24
North West 631 416 -215 8
Scotland 353 276 -77 -37
South East 1,654 1,278 -376 5
South West 721 524 -197 -23
Wales 213 148 -65 12
West Midlands 694 429 -265 17
Yorkshire and the Humber 403 304 -99 -26
Total 7,337 5,558 -1,779 -174

Table 2. Multiple openings and closures by region 2012 (Source: Local Data Company)

Matthew Hopkinson, director of The Local Data Company, said: “2012 was the first year that we have seen significant reductions of multiple retailers in town centres across Great Britain with a net loss of nearly 1,800 stores which, if one takes an average size of 4,000sq ft per unit then this equates to over 7m sq ft of space. This is the equivalent of 131 football pitches, or just over four Westfield London’s. 

“We can expect to see this trend continue and indeed accelerate in 2013 as more leases come up for renewal along with the ever increasing demands from consumers for space that delivers an experience good enough to pull them away from their technology devices. The end of 2012 and the beginning of 2013 has seen the most dramatic period on record as companies controlling more than 1,400 shops went into administration.

“Will the discounters, pawnbrokers, charity shops, coffee shops and supermarkets continue to fill a large proportion of these closing stores? Town centres will have to adapt faster than ever before to maintain their attraction to consumers. Data to be released tomorrow on independent retailers will add to these woes.”