Shop closures add to the retail gloom in the UK

London:

Retail chains shut an average of 20 stores a day in the first six months of this year as the pace of high street closures accelerated.

A net total of 953 stores closed in the first half of the year, compared with 174 in the whole of 2011, according to new figures from consultants PwC and the Local Data Company, a retail information provider,

This equated to 20 stores operated by the retail chains on average closing every day, compared with 14 a day in 2011.

“All retailers in distress have too many locations,” said Mike Jervis, PwC insolvency partner and retail specialist. “Relatively long leases, with inflexible terms, have been entered into in a growth phase of the economy which is no longer appropriate.”

The closure of 953 stores equates to a net reduction of 1.4 per cent in the first half of 2012, compared with a 0.25 per cent net reduction in 2011, and a net increase of 1.2 per cent in 2009.

The analysis shows that across big retail chains in 500 town centres, the hardest hit in the first half of this year were computer games stores, toy shops, clothes shops, gift shops, jewellers, card and poster shops and furniture stores.

In contrast, units offering cheque cashing, pawnbrokers, discount stores, convenience stores, coffee shops, bookmakers, bureaux de change and charity shops bucked the trend with growth.

“If all retailers in distress have too many stores, then the appetite of the convenience food sector and value chain players to consume excess high street space is a symptom of the continuing pressure on consumer spend,” said Christine Cross, chief retail adviser to PwC.

The pace of store closures reflects the surge in casualties in the retail sector. This year has seen the demise of Peacocks, the value fashion chain, Blacks Leisure, the outdoor goods specialist, Game Group, the video games retailer, and Clinton Cards, the greeting card retailer. Although all were salvaged in one form or another, hundreds of stores closed.

Most recently, JJB Sports fell into administration. Sports Direct, the rival sports retailer controlled by Mike Ashley, agreed to acquire 20 stores, leaving 160 facing closure.

Cross at PwC added: “Apparent interest in the JJB stores from value chain players shows that some retail sectors are still in growth.”

Matthew Hopkinson, director of the Local Data Company, said: “The departure of so many larger stores is a major issue for many towncentres, especially in secondary centres, where they have for many years been their high street’s anchors.”

Last week, figures from the Local Data Company showed that in the first half of 2012, there was a net increase of 0.8 per cent in the number of independent retail shops — but this was a significant deceleration from the 2.4 per cent net increase in 2011, and analysts fear that closures could start to outweigh openings.

— Financial Times