New high street store openings fell 10% to 4,083 in 2017, down from 4,534 in 2016, as physical stores face ongoing challenges from online and experience-seeking millennials.
Research compiled by the Local Data Company (LDC) for PwC, unveiled that an average of 16 high street stores closed every day in 2017, with the second half of the year reporting substantially more closures and less openings than the first. The report said this reflected a tougher trading environment overall, with a slowdown in consumer spending alongside rising staff and business rates costs.
PwC consumer markets leader Lisa Hooker said: “2017 was tough for the British retail industry. We saw volatility from month to month across different sectors, as wage growth failed to keep up with inflation forcing many shoppers to think more carefully about their spending habits.”
She continued: “Digital offerings are increasingly becoming make or break in areas like fashion. For [this sector], store closures are less driven by the market environment and more by bigger structural changes, as customers increasingly expect to interact with their service providers online or via apps,” she added.
Hooker said 2018 has seen a tough start to the year, but it’s important to remember the British high street still plays a vital role. Almost 4,000 new clothing shops still opened last year, despite 700 closing down.
PwC restructuring partner Zelf Hussain said “survivors and thrivers” will be those who address their cost issues and provide a compelling bricks and clicks offering, to compete with pureplay etailers who don’t have the same legacy cost issues.
London saw the greatest number of net closures (-336), with this region being hardest hit by the business rates reassessment.
The Local Data Company senior relationship manager (Retail) Lucy Stainton, said: “[Our] latest figures show that there continues to be a vast amount of churn across the physical landscape. It is this ‘re-occupancy’ and evolution of the use of space which is most striking, as banks become coffee shops and pubs change to nurseries.”
Stainton said sub-sectors with the highest growth rates largely have ‘experience’ in common, as consumers are still very social and want to engage with their high streets and physical space.
She said: “For 2018 we predict there will be continued green shoots of growth across almost all sub-sectors, visible beneath the headline trends, as newer entrants and younger brands take this ‘shake out’ as an opportunity to pick up available property.
“Businesses with a relevant proposition and a strong understanding of their customer can absolutely still thrive in the right locations,” Stainton added.