Retail chains in Britain closed an average of 20 stores a day over the past year. According to a report by the Local Data Company and PwC, the number of shop closures in 2012 soared tenfold on the year before.
It makes for some depressing reading to say the least. The survey found that 1,779 stores were closed in 2012, compared to just 174 in 2011.
The downturn seems to be affecting every sector, from travel agents and sports goods shops, to banks, computer game shops and jewellers. However, some businesses seem to have bucked the trend, including charity shops, pawnbrokers, pound shops, betting shops and payday loan companies, basically all the services people are likely to use when they are broke like Greece and out of work like Spanish youths.
It gets worse. The number of closures is predicted to rise and the rate of closures in December, January and February is up and could hit 28 a day. Many companies are falling into administration, including former heavyweights like HMV. Blockbuster, Jessops and Comet are down and out as well.
Mike Jervis, insolvency partner and retail specialist at PwC believes the downward trend is getting even worse in 2013.
“2012 saw more retail chains go into insolvency than ever before. The failed chains generally shared two problems- too many stores and too little multi-channel activity,” he said. “A number of them had failed to deal with their underlying issues by hiding behind light touch restructuring processes, especially Company Voluntary Arrangements.”
Christine Cross, chief retail adviser to PwC, said the figures are more disappointing than many had hoped, but she pointed out that several major chains were forced to resort to closures and this was anticipated for a long time.
“What is surprising is the speed at which stores have been picked up by value and grocery retailers in particular. Good businesses with good operating models and good people don’t fail,” she said.
Although closures are up across the board, some regions have taken a bigger hit than others. The South East leads the way with 376 closures, 265 shops closed their doors in West Midlands and the North West saw 215 closures. The North East, Scotland, Yorkshire and the Humber stayed in double digits.
