High Street in turmoil: 14 shops disappear every day as 'in-home leisure' is blamed for retail crisis
- New store openings in the first half of the year was down by a third, says PwC
- With large numbers of stores closing, High Streets are losing 14 a day
- Report pins blame on rising popularity of 'in-home leisure'
- BDO report confirms High St gloom with sales falling again in October
British High Streets are losing shops at the rate fourteen a day and a lack of customers has put the brakes on businesses opening new stores, a report revealed today.
The number of new stores opening in the first half of the year was down by a massive third on the same period last year, said the report from PricewaterhouseCoopers, which picked out the increasingly popularity of 'in-home leisure' as a major factor behind the retail crisis.
The growth of internet shopping and higher business rates have combined with the trend of more at-home entertainment to create a perfect storm for the UK's retailers.
PwC's study of 500 high streets with the Local Data Company found 2,692 stores had vanished in the first six month of the year - roughly 14 a day.
Their difficulties were laid bare by a second report today from BDO which showed that in-store sales fell for the ninth consecutive month in October.
Their High Street Sales Tracker indicated that like-for-like High Street sales fell by 2 per cent last month, and even the growth of online sales has started to slow down. Sophie Michael, head of retail and wholesale at BDO, said the second poor October in a row was a 'real worry' for stores.
PwC suggested that Italian restaurants - as evidenced by the travails of Jamie's, Prezzo and Carluccio's - have been particularly badly hit by the change, while retailers such as Toys R Us and Maplin have gone to the wall as more people shop online.
The accountancy giant's study of 500 high streets with the Local Data Company found 2,692 stores had vanished in the first six month of the year - roughly 14 a day. The rate is similar to the same period in 2017 - but crucially there has been a dramatic fall in the number of openings year-on-year.
Compared with 2,342 shops opening their doors in the first six months of last year, there were 1,569 openings between January 1 and June 30.
Greater London and the South East were the regions worst hit by closures of chains, followed by the Midlands, the North East and East of England. Wales was the best-performing region, although it still saw a net loss of 22.
Lisa Hooker, consumer markets leader at PwC, said the continued rate of store closures 'reflects the new reality that many of us prefer to shop online and increasingly eat, drink and entertain at home'.
'The high street is adapting to an overcapacity in retail and leisure space resulting from these channel shifts,' she said.
Retail trends: Sales across key sectors in Britain's retail industry since May 2017, according to BDO.
'Openings simply aren't replacing the closures at a fast enough rate. Specifically, the openings across "experiential" chains, such as ice cream parlours, beauty salons and vape shops, haven't been enough to offset closures in the more traditional categories.
'Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and Company Voluntary Arrangements already will further intensify the situation.'
Tom Ironside, director of business and regulation at the British Retail Consortium, told The Guardian: 'The pressure on retailers, which is contributing to store closures, will continue unless the government takes decisive action.'
Hard times: Marks & Spencer saw its clothing and food sales fall in the first half of the year
He also called for the Government to address 'spiralling business rates for the larger businesses that employ the majority of the UK's 3.1million retail workers'.
High streets minister Jake Berry said: 'The Government recognises the challenges facing high streets driven by changing consumer behaviour.
'That is why the Budget has high streets at its heart. We have created a £675million fund to help high streets adapt, slashed business rates by a third for the majority of smaller businesses, 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.
'These measures totalling over £1.5billion show the Government's determination to make thriving high streets a permanent part of every community in England.'
Toys R Us, Maplin, Poundworld and Coast have been among the major fatalities on the high street so far in 2018, while House of Fraser was rescued from administration by Sports Direct founder Mike Ashley.
Debenhams, Mothercare, Homebase and Carpetright are all closing outlets. Mark & Spence, which is also in the midst of a closure programme yesterday revealed disappointing food and clothes sales fro the first half of the year.
CVAs have been used with increased frequency as large and established chains struggle to meet their rental and rates costs. Jamie's Italian and Prezzo have announced CVAs, while Gourmet Burger Kitchen and Byron are also utilising the arrangements.
The BDO report suggested that love-it-or-loathe-it Black Friday on the horizon, many shoppers shunned the high street in October and are holding out for better deals. Online sales growth came in at 10.5 per cent last month, marking the third lowest monthly result since the tracker data was first published in 2010.
Including online and in-store sales, like-for-like retail sales grew by 1 per cent last month, the report said.
Struggling: John Lewis reported a 99% drop in half-year profits in September
Ms Michael said: 'Retailers have seen margins squeezed all year and now they enter a lengthy discounting period in the lead-up to Black Friday.
'Such a weak start to the final quarter will have been tough to swallow, and this could easily be the new normal for October as shoppers hold back their discretionary spending until they start seeing bargains.'
Like-for-like sales of lifestyle and homeware goods have now recorded negative growth every month since January, falling by 2.9 per cent and 4.1 per cent respectively for October.
The cold snap at the end of the month provided a small boost to fashion sales but could not prevent an overall sales dip of 1.3 per cent for the month. Overall consumer footfall was down every week bar one last month.
Footfall in shopping centres was down every week in October, falling by 4.3 per cent in the third week, when many children were off for the school holidays.
Retail parks fared slightly better, seeing an increase in footfall for half of the month.
Summing up the state of the sector, BDO said: 'The critical final quarter of 2018 got off to an ugly start with a very poor performance for bricks-and-mortar and relatively slack growth for nonstore sales in the month of October.
'With recent indicators pointing towards consumer confidence decreasing further, marking concerns over personal finances and reluctance on the part of consumers to make major purchases, it will be difficult for retailers to recover in the final months of the year, potentially threatening upcoming promotional dates both in-store and online.
Turbulent year: In August, Sports Direct's Mike Ashley snapped up ailing department store chain House of Frase
'Philip Hammond’s recent Budget, though providing some welcome relief for smaller businesses, appears to be far too little too late, particularly for larger retailers.'
But, Ms Michael of BDO said: 'While the smallest retail businesses will feel the benefit of the cuts announced, they do nothing to support the larger retailers that shoulder almost 70% of the rates burden.'
The retailer sector has been thrown into the spotlight this year, and in many cases, for all the wrong reasons.
Households are seeing the cost of living going up, wage growth remains relatively subdued and retailers are seeing business and rental rates soar. Put all these elements together and it is no wonder Britain's high streets are struggling.
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