Five shops closing every week
Retailers opting for shorter leases and ‘pop-up’ shops
Retailers are opting for shorter term leases and temporary outlets – or ‘pop-up’ shops – as the high street continues its battle with online shopping.
New research shows five stores a week are closing across Scotland’s towns and cities which are likely to become increasingly populated by shops selling fast-food and other convenience goods and services.
Coffee shops, charity shops and jewellers were among those growing at the fastest rate during the first half of 2015.
The data also reveals that across multiple retailers in 500 town centres cheque cashing, banks, fashion shops, gift shops, and women’s clothing shops have been amongst the hardest hit in the first half of 2015.
Five stores a week closed across Scotland’s largest towns and cities in the first six months of this year.
According to the analysis, 121 stores owned by multiple retailers shut up shop, with 95 opening. During the same period in 2014, a total of 133 new stores opened, a move that helped to minimise the overall high street impact after 14o outlets pulled down the shutters (-7 stores).
Over the first half of 2015, only Perth and Edinburgh (including Leith) reflected a net increase, albeit it by just one store. In H1 2014, Edinburgh recorded a net loss of two stores, with Perth remaining stable with a net uplift of three stores. (see table below)
In contrast, the remaining locations reported a net reduction in outlets, with Falkirk (-9) and Glasgow (-7) reporting the biggest loss. Aberdeen recorded a net loss of two stores compared to a net gain of three in H1 2014 and 17 in H1 2013.
While there have been fewer retailer insolvencies this year, resulting in a less hostile environment for multiple retailers, the ‘clicks over bricks’ battle continues to rage.
According to Martin Cowie, head of private business, PwC in Scotland, store portfolios continue to be reviewed and streamlined in response to the relentless advance of online shopping.
He said: “The digital revolution impacting our high streets shows no sign of abating; consumers continue to adopt newer digital channels, mobile technologies and smartphone apps as they become available while younger ‘digital natives’ are developing a different type of relationships with traditional outlets than previous generations.
“Landlords are also being hit by this tug of war between ‘clicks’ and ‘bricks’. We’re also seeing major changes for landlords with the average unexpired length of a lease now less than nine years compared to 22 years back in the early 1990’s. The renewal rate on leases is down to 9% in recent years, compared to 30% in the mid 2000’s.
“As a result of this ongoing trend, multiple retailers are more likely to approach town centre openings very cautiously. This is likely to mean shorter-term leases and more temporary pop-up type formats, particularly during high footfall periods such as Christmas and major city centre festivals and in secondary locations.
“It’s becoming increasingly likely that the high streets of the future will be based around immediate consumption of food, goods and services or distress or convenience purchases. It might not be what many consumers want but the data and business economics are pointing in that direction at the moment.”
The PwC/LDC study shows that 2,634 outlets closed in a six-month period compared to 2,197 openings, a net reduction of 437 shops. In H1 2014, 3,003 outlets closed in a six-month period compared to 2,597 openings, a net reduction of 406 shops.
Agaisnt the backdrop of a steady economy and tightening regulation, cheque cashing shops have been hit hardest, closing 116 shops while there were six openings.
The changing profile of town centres is very clear in this analysis – 155 goods shops of a more traditional type (e.g. shoe & clothes shops) pulled down the shutters. Service retail (e.g. travel agents, pawnbrokers) saw a continued net decline in shops from -245 units (-1.43%) in H1 2014 to -299 (-1.72%) in H1 2015. Leisure chains (food, beverage & entertainment) have continued to thrive albeit at a slower rate with the number of outlets from +170 (1.17%) in H1 2014 to +43 (+0.29%) in H1 2015.
Although within the leisure sector there is a variance with categories such as American restaurants (Burger chains), Café & Tearooms and Coffee shops, which are growing, while betting shops and pubs are closing.
The last five years
According to the analysis, the pace of retailers shutting up shop reduced by 35% from 20 a day in 2012 to 14 a day in first half of 2015.
This is the lowest closure rate in five years and also represents the lowest levels of churn- entries and exits- on the high street since 2011 as upheaval driven by retailers reacting to shifting customer habits starts to subside.
The analysis of 65,588 outlets operated by multiple retailers* in 500 town centres across Great Britain during H1 2015 found that overall volumes of activity ( openings + closures) have plummeted from a record 7,749 in H1 2010 to 4,831 in H1 2015 (see below)
Matthew Hopkinson, director of The Local Data Company, said: “The results of the openings and closures of chains in our top 500 town centres in the first half of this year are encouraging. Closure rates are down and the gap between openings and closures is levelling out. This is as a result of wider consumer confidence, adjustments to market rents and most importantly a better understanding by chain retailers as to the role and opportunity that shops still have to play in the ‘total retail’ environment.
“As ever, the devil is in the detail. We are seeing the continuing decline of pubs and clothing shops whilst seeing previously expansive sectors such as banks, betting shops and cheque cashing all in retreat from the high street. In the last five years alone over 62,000 shops of multiple retailers have opened and closed in the top 500 GB towns so look wider and that number rises significantly.”