The number of store closures on UK high streets dropped to the lowest level in seven years, new research has found.
The Store Openings and Closures report by PWC UK and The Local Data Company found that in the first half of 2022, there were 6,146 store closures (-30% vs 2021 YoY) from multiple retail operators (five or more outlets nationally) compared to 3,888 openings (+11% vs 2021 YoY), resulting in the lowest number of net closures (2,258) in the past five years.
The study reported four closures, 21 openings, and a net closure of 12 stores per day during the first six months of 2022.
New openings were driven by takeaways, particularly branded chains; restaurants that have moved into empty spaces; amusement arcades have taken advantage of vacant units and lower rents to open particularly in suburban areas and seaside towns and DIY shops.
The store types that have seen the biggest decline are banks and financial services; charity shops and betting shops.
Lisa Hooker, industry leader for consumer markets at PwC UK, said the drop in closures was positive news but there is more hardship to come for businesses, particularly in the face of rising costs.
“A reduction in closures and growth in openings give some reason for optimism, but any positivity must also be viewed alongside the significant concerns over the rising cost of living and how it will impact people’s ability to spend. In addition to pressures on consumer demand, we mustn’t also forget that increasing utility, input and labour costs will significantly affect the viability of all high street businesses.
“With soaring prices for food, petrol and utility bills, inflation at a 40-year high and the Bank of England warning the UK will fall into a prolonged recession at the end of this year - this will impact everyone, and is only expected to deepen. We’ve already seen it impact Consumer Sentiment this year, and retailers and operators must help consumers mitigate their financial challenges now, while protecting themselves from the financial squeeze.
Hooker warned that high streets still need support in order to thrive. “While shopping behaviours have changed, the high street has stood the test of time, with a post-pandemic bounce back and our research indicating that the younger generation has more affinity with shops than perhaps expected. But it remains in a state of transition, and cosmetic interventions alone will not succeed. Success is also likely to depend on the focus of a new Prime Minister, and how they intend to help high streets.
“Business rates, for instance, will be a critical area for operators, and it will depend on how they are reformed in the near future (if at all). To truly level up, the challenge for local leaders - working with businesses and communities - is to create places that work for all those who visit, live or work there.”
Lucy Stainton, commercial director at The Local Data Company, said the high street was still adjusting in the wake of the pandemic.
“The number of empty units across high streets, shopping centres and retail parks continues to decline, as we see the holes left behind from a litany of CVAs and insolvencies being either reoccupied or repurposed due to the new planning laws on converting retail property to other uses.
“Although it has been over two years since the start of the pandemic, we are still yet to define our ‘new normal’ which is having a sustained impact on city centre locations with many new openings being focussed on smaller market towns and local high streets as people continue to work from home, with city centres further hampered by both train strikes and airport travel disruption reducing tourist numbers.
“What’s clear from the latest numbers, is that the impact of Covid-19 has finally washed through. However, we now face a new round of economic headwinds, so it remains to be seen if we can really expect this more positive trajectory to continue.”