Business

Retailers shut 2,700 shops in first half of the year

Store closing down Image copyright Getty Images

About 14 shops are closing every day as UK High Streets face their toughest trading climate in five years, a report has found.

A net 1,123 stores disappeared from Britain's top 500 high streets in the first six months of the year, according to the accountancy firm PwC.

It said fashion and electrical stores had suffered most as customers did more shopping online.

Restaurants and pubs also floundered as fewer people go out to eat or drink.

London was the worst-hit region, PwC said, while Wales had the lowest number of closures.

"Looking ahead, the turmoil facing the sector is unlikely to abate," said Lisa Hooker, consumer markets leader at PwC.

"Store closures in the second half of the year due to administrations and company voluntary arrangements [a form of insolvency] already announced will further intensify the situation."

According to PwC, 2,692 shops shut across the UK in the first half of 2018, while only 1,569 new stores opened. The data looks at retail chains with more than five outlets.

Which sectors were hit hardest?

Electrical goods stores were among the biggest casualties, largely due to the collapse of Maplin in February that resulted in 50 stores being closed.

Italian restaurants also struggled, as Jamie's Italian and Prezzo both shut stores after striking rescue deals with their creditors, while Strada also made closures.

PwC said there was net decline of 104 fashion shops and 99 pubs as openings failed to replace closures "at a fast enough rate".

There were some bright spots, however, with supermarkets, booksellers, ice cream parlours and coffee shops all seeing slim net gains in their store counts.

Which regions suffered most?

According to PwC, Greater London had the largest number of store closures of any UK region, with a fall of 716, while only 448 were opened.

None of the UK regions analysed by PwC recorded a net gain in store count in the first six months of the year.

Newcastle fared worst in the North East, with a net decline of 17 stores, while Nottingham fell by 35.

Other cities that suffered included Leeds, which opened nine stores but closed 35, and Reading where there were 39 closures and only 18 openings.

What's causing the problem?

Retailers are facing a perfect storm of pressures as consumers rein in their spending and do more of their shopping online.

As a result, many retailers have found themselves struggling to pay their rents and other overheads, such as a rising minimum wage and business rates.

Image copyright Getty Images

In last month's Budget, Chancellor Philip Hammond promised to spend £900m on reducing the business rates bill of 500,000 small retailers by a third.

He also promised a new tax for online firms that employ fewer staff and pay far lower business rates.

However, the British Retail Consortium said the chancellor was "tinkering around the edges" and called for "wholesale reform" of the business rates system.

Jake Berry, the minister responsible for High Streets, said the government was determined to make them thrive.

"We have created a £675m fund to help high streets adapt, slashed business rates ... and are creating a task force guided by Sir John Timpson, one of the UK's most experienced retailers, to ensure that High Streets are adapting for rapid change and are fit for the future," he said.

More on this story