retail report
of town retail parks which benefit from easy access and good parking and bolstered by car travel recovering more quickly than public transport. Moreover, shopping centres have been hit particularly hard by closures of fashion retailers, department stores and casual dining restaurant chains - and therefore less attractive destinations in their own right.
Flight from cities
Since the pandemic, city centres and London postcodes have seen an acceleration in net closures as more people work from home or adopt hybrid working patterns. London is again the worst performing region by some margin. Similarly, the underperformance of the city of Birmingham has caused the West Midlands to perform worse than the East Midlands, with towns in the East Midlands more sheltered from the surge of Covid closures. Many will be hoping that hosting the Commonwealth Games in the summer will see a reversal of fortune for Birmingham. Lisa Hooker, consumer markets lead at PwC, said: “The last two years have been tumultuous for retailers but the closures we’ve seen are an acceleration of what was happening before the pandemic. Changes in consumer behaviour, changing patterns of working and the shift to online is impacting on both retail and service chain operators.
“Location matters most to consumers and whilst city centres and shopping centres falter, retail parks and standalone operators have broad appeal. Multiple operators are taking note of this changing consumer behaviour and are relocating stores to where their customers need them to be. “Many of the CVAs and administrations that
took place in early 2021 have now been captured, including department stores, fashion retailers and hospitality operators that have left gaps in city and shopping centre locations. There is a pressing need to radically reshape and even repurpose towns and city centres plagued by these empty units and shopfronts. To regain lost footfall, high streets must understand why retail parks are so attractive to consumers or look for ways to better serve
March/April 2022
local needs, encouraging independent retailers and entrepreneurs to take this opportunity to grow into the gaps that are emerging.”
Categories almost all driven by acceleration online
On a sector by sector basis the growth seen in a small number of categories is nowhere near enough to offset the declines in other categories. Leisure dominates growth, with takeaway chains buoyed by a rise in delivery as well as walk-in demand. Smaller chains and franchise operators, such as cake shops and amusement arcades, have also been able to take advantage of lower rents and vacant units to expand their footprints.
“The last two years have been tumultuous for retailers, but the closures we’ve seen are an acceleration of what was happening before the pandemic.”
The big net declines in many other categories reveal the impact of major shifts in how consumers buy and transact. The shift to online, accelerated by consumer behaviour during Covid lockdowns, continues to be the biggest common denominator for closures in both retail and services. Fashion is the fastest declining category with almost 4 net closures a day. Several fashion and department store closures chains were acquired by online operators with no ambition to operate stores. Banks have accelerated their closure
programmes during the pandemic, following several years of slowing down closures; banks have been either the number one or two top closing categories in five of the past six years The move to online has even impacted the charity sector, which saw a net decline of 557 in 2021
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However, restaurants and pubs have fallen out of the top 10 fastest declining categories, revealing their overcapacity in the mid 2010s is now beginning to even out, resulting in fewer closures. Lucy Stainton, commercial director at The Local Data Company, said: “These latest figures for 2021 show the gap between openings and closures has widened, though hopefully this marks the end of the worst of the structural decline in chain retail exacerbated by the pandemic. “2021 was an extremely challenging period for occupiers, with the first three months lost to a strict lockdown, limitations on international travel impacting tourism, increased migration to online retailing, mobility restricted across all sectors and continuing home working impacting city centres. There is no doubt that the numbers are stark and 2021 saw an acceleration in net closures across this sector, which in isolation looks dramatic. “However, it’s also worth noting that vacancy
rates have started to stabilise across the market, meaning that the number of empty shops is no longer increasing. This is due to a significant uptick in independent retail and leisure businesses opening sites in units left vacant by chains. The rental tone is softening and more space has become available in prime locations previously occupied by bigger brands, paving the way for new and up-and- coming operators. This trend is significant for a number of reasons, not least because, in theory, the growing independent operators of today are potentially the chains of tomorrow. As these businesses gain momentum, they also gain better infrastructure and stability. “Ultimately, these latest statistics on the
performance of the chain sector should not be viewed in isolation and don’t point to ‘the death of the high street’, but rather represent a last shakeout of some of the heritage brands, paving the way for new operators and so the constant evolution of physical retail continues.” The Local Data Company tracked 203,718 outlets operated by multiple operators across Great Britain, between 1 January and 31 December 2021.
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