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.

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.

MAJOR HIGH STREET STORES HIT BY RETAIL WOES 

Debenhams

 The department store chain announced plans to close 50 stores in October, accelerating an existing disposal plan after it made a record annual loss.

Gourmet Burger Kitchen

The posh burger chain has revealed plans to close 17 of its 85 restaurants after tough competition took a bite out of its performance. Other restaurants that have undertaken company voluntary arrangements so far this year include Carluccio's, Byron, Prezzo, Gaucho and Jamie's Italian.

House of Fraser

The department store fell into administration and was bought by Sports Direct founder Mike Ashley. He has said he will aim to keep 47 of the 59 stores open, with three closures in Edinburgh, Hull and Swindon already announced.

Marks & Spencer

High street stalwart M&S is to shut 100 stores by 2022 in a radical overhaul of its estate. Profits at the company have slumped by almost two-thirds due to the costly closure plan combined with a decline in sales across key departments.

Homebase

The DIY chain is set to close 80 stores, hitting up to 2,000 jobs. It follows a botched takeover by Australia's Wesfarmers.

Poundworld

Called in administrators in June in a move affecting 5,100 jobs. The business was hit by falling footfall, alongside rising costs and weak consumer confidence. All stores have now been closed.

Toys R Us

The toy chain went into administration on the last day of February after failing to find a third-party buyer. It came after HMRC sought to recover £15 million in unpaid VAT and this finally tipped the company into administration.

Maplin

One of the UK's biggest electronics retailers collapsed into administration on the same day as Toys R Us after talks with buyers failed to secure a sale. The business faced the slump in the pound after the Brexit vote, weak consumer confidence and a withdrawal of credit insurance.

Mothercare

The ailing baby goods and maternity retailer will close 50 to 60 stores as part of a planned turnaround.

Carpetright

The embattled flooring firm is embarking on a store closure programme, also part of a restructuring, after announcing heavy losses.

New Look

The clothing chain announced earlier this year it would close 60 UK stores and cut 1,000 jobs as part of a financial restructuring.

Conviviality Retailing

The major drinks and off-licence supplier, which owns Wine Rack and Bargain Booze, went into administration in early April. The company had grown too quickly by merger, there were a series of profit warnings and a £30 million tax bill for which Conviviality was forced to ask for extra funds from investors - who refused.

Warren Evans

The bed, mattress and furniture retailer in London and the south-east went into administration one week after putting itself up for sale. The company, known for its ethical stance, had been losing money for some time under the pressure of rising costs and shrinking customer spending.

Calvetron

The owner of Jacques Vert, Windsmoor, Dash and Eastex fashion brands, which ran about 300 UK concessions in stores including Debenhams and House of Fraser, went into administration at the start of May. Bosses said inflation and wage freezes had been a driving force behind decreased spending.

Juice Corporation

The firm behind fashion brand Joe Bloggs and the retailer that designed the wedding dress for Diana, Princess of Wales, collapsed into administration in January. Although the group made profits, it had failed to make inroads into the fashion market.

Coast

Womenswear retailer Coast went into administration in mid-October, impacting 300 jobs at 24 stores. But sister brand Karen Millen bought out parts of the business, rescuing around 600 jobs at 145 department store concessions.

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.

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

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.'

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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

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

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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