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A closed Edinburgh Woolen Mill shop on Princes Street in Edinburgh.
A closed Edinburgh Woolen Mill shop on Princes Street in Edinburgh. Photograph: Andrew Milligan/PA
A closed Edinburgh Woolen Mill shop on Princes Street in Edinburgh. Photograph: Andrew Milligan/PA

Record number of shops close with worse yet to come, warn analysts

This article is more than 3 years old

About 11,000 outlets shut in first half of 2020, twice as many as in same period last year

A record number of shops disappeared from high streets across the country in the first half of 2020 as the Covid-19 lockdowns hammered the retail sector.

A total of 11,120 chain store outlets closed between January and June, while 5,119 opened. The 6,001 net store closures was a record high and compared with 3,509 in the first half of last year.

Analysts predict there will be many more closures to come as the data does not include outlets that were temporarily closed under lockdown rules when analysts visited and which might end up permanently shuttered.

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The figures, published by the Local Data Company and advisory firm PwC, show that on average more than 60 stores closed per day while 28 opened. The research covers high streets, shopping centres and retail parks in England, Scotland and Wales.

Quick Guide

Why are UK high street retailers in trouble?

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What’s the problem?

Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as the coronavirus pandemic. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result.

In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores. 

At the same time, there is a move away from buying "stuff" as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit and the coronavirus, have coincided with economic and political uncertainty that has dampened consumer confidence.

What help do retailers need?

Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. Many businesses which deal with complex supply chains also want additional help with the new red tape and import charges imposed after Boris Johnson's Brexit deal saddled them with extra costs.

What is the government doing?

In the December 2019 Queen's speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m "future high streets fund" under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.

Photograph: Matthew Horwood/Getty Images Europe
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York was the worst affected, with 55 net shop closures in the first six months of the year, followed by Newcastle upon Tyne (43) and Worcester (26).

The shop closure data reflects a crisis on the high street that has cost thousands of jobs as chains, led by already struggling fashion, mobile phone and betting shops, closed their doors.

During the period, Carphone Warehouse closed all 531 standalone branches, and fashion chains including Oasis, Warehouse, Laura Ashley and Cath Kidston all closed down. Big names including Marks & Spencer, Debenhams and House of Fraser also closed stores.

Lucy Stainton, the head of retail and strategic partnerships at the Local Data Company, said: “The results from the first half of 2020 are a stark reminder of the challenges faced by retailers in the first six months of the year, which included a national lockdown.”

She feared this was the tip of the iceberg, with 22% of chain stores still closed temporarily “With each week that passes since retail and hospitality businesses were given the green light to reopen, the likelihood of these occupiers ever trading again in those units reduces.”

She added that local lockdowns and other restrictions such as the 10pm curfew would continue to have “a devastating impact” on the sector, with more closures likely after the key festive trading season ends.

The reports says: “Unless further government stimulus is announced, we’re guaranteed to see further closures” as a result of factors such as further movement restrictions, the unwinding of the furlough scheme this month and the end of business rates relief and VAT reductions for the hospitality sector in March.

The data does not cover independent stores, which researchers said were likely to have seen a resurgence as more people worked from home and shopped locally during the pandemic. The report found that among the chains, takeaways and coffee shops were among the fastest-growing types of high-street outlet.

In regional terms, Greater London saw the highest total number of net closures – 1,008 – followed by the south-east of England and the north-west. But Yorkshire and the Humber recorded the biggest loss of chain stores in percentage terms, with a net 3.4% of outlets disappearing, compared with 2.2% in the east of England, which was the best performing region.

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Shopping centres were the worst-affected location.

Lisa Hooker, a consumer markets leader at PwC, said the pandemic had accelerated existing changes in shopping behaviour as it had “forced experimentation” during the lockdown.

“We all knew that consumers were shifting to shopping online or changing their priorities in terms of the things they buy, but what Covid-19 has done is create a step-change in these underlying trends to where they have now become the new normal,” she said. “We all still want and need to physically visit shops and leisure operators, it’s likely then that whatever happens retail will come out of this smaller but stronger.”

This article was amended on 21 October 2020 to correct the list of towns worst affected by shop closures. Durham and Corby were incorrectly listed, while Newcastle upon Tyne and Worcester should have been included.

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