Shops in Scotland are closing at their lowest rate since before the pandemic, though the impact of the cost of living could upset the more optimistic trend.

New analysis by PwC and the Local Data Company shows that during the first half of this year, 536 shops in Scotland closed their doors, while 356 shops opened – a net loss of 180 stores managed by retailers who have more than five outlets.

With the overall reduction at -1.2%, Scotland’s closure rate has improved from the first six months of 2021, when it was -2.8% and sits just shy of the pre-pandemic rate of -1.1% – but remains above the Great Britain average of -1.1%.

The study suggests that the slight recovery is being driven by leisure categories, as a result of post-pandemic pent-up demand.

Closures have seen an accelerating trend since the mid-2010s, driven primarily by the shift to online retail and services such as banking and post offices. However, this was offset to some extent due to the rapid rollout of leisure operators, such as casual dining restaurant chains and coffee shops.

A rapid shake-out during the pandemic (2020 and 2021), predominantly affected retailers who had over expanded, such as restaurant chains and those who failed to adapt their operating models to omnichannel – most notably fashion.

Follow Daily Business on Linke

Takeaways have been boosted by the growth of home delivery, and their ability to operate throughout lockdowns and the pandemic, while the restaurant sector has seen a resurgence as new chains take advantage of the ability to expand quickly into empty spaces and take advantage of lower rents and pent-up consumer demand.

Similarly, amusement arcades have also benefited from the availability of vacant units and lower rents to open particularly in suburban areas and seaside towns.

While not categorised as leisure, DIY shops have taken advantage of home improvement trends formed during lockdowns.

At the opposite end of the spectrum, four categories experienced a decline of more than 100 units across GB, including banking and financial services, which continues to be impacted by the longer-term withdrawal of physical branches and the shift to online banking

Charity shops, which have historically taken advantage of vacant retail space in order to expand, have fallen victim to the shift to online shopping and emerging digital marketplaces.

While still seeing a decline, the closure rates for betting shops (266 net closures) and fashion retailers (128 net closures) has improved significantly in comparison with previous years.

Jason Higgs, head of retail for PwC Scotland, said: “There’s no doubt that our high streets and city centres have changed.

“Glasgow and Edinburgh, for example have capitalised on pent-up consumer demand for leisure pursuits, with the capital in particular responding to the growing appetite for destination retail and leisure with the continuing development of St. James’s Quarter, tempting consumers away from their screens by providing an experience across multiple categories

“As we move into the second half of the year against the backdrop of the increasing cost of living, there’s no doubt that retailers will yet again come under pressure as a result of consumers’ ability to spend as well as the costs related to running their businesses. Striking the balance between helping the consumer while ensuring their own survival will be key.”

Lisa Hooker, Industry Leader for Consumer Markets at PwC UK, said: “While the outlook is better than it was during the height of the pandemic, it’s worth noting that the numbers still show a decline, with our net numbers equating to 12 closures a day in the first half of this year.

“Added to that, retail footfall remains 10-15% below pre-pandemic levels and openings lack momentum – particularly outside leisure.”