Closure rates slow but retailers face testing times
Shops are closing at their slowest rate since 2010, as 14 outlets a day closed their doors in the first six months of this year, new figures show.
Data from the Local Data Company, collated on behalf of PwC, reveals that 2,564 units shut in shopping centres, high streets and retail parks between January and June.
Despite the rate of closure being at a seven-year low, the number of closures sill outpaced the number of new store openings, as 2,342 were set up in that time.
Figures from the British Retail Consortium reveal wider issues for retailers too, as footfall fell by 2% in October when compared to the same month a year ago.
That is the highest monthly year-on-year drop in footfall since June 2016, when the UK referendum result derailed consumer confidence.
While coffee shops, beauticians and tobacconists all recorded growth of late, women’s clothing outlets, gift shops and charity shops have been particularly hard hit.
The data suggests a resilient outlook across the first half of the year, but a drop in consumer confidence and reduced spending in the past few months is yet to be noticed.
Given rising business rates and increasing operational costs, many smaller retailers have needed to streamline their operations to stay competitive, especially as online shopping has become more prevalent.
Currently, one in ten retail shops are empty, according to BRC Chief Executive Helen Dickinson, who claims that rising business rates have stifled investment and growth, while driving up insolvency risk.
Visa report that consumer spending also plummeted by 2% in October, which marks the largest decline in more than four years.
The payment technology firm has recorded a drop in spending in five of the last six months, as high inflation and poor wage growth squeeze household budgets.
While Black Friday sales will act to give a clearer indication of the current state of the market, the latest figures suggest a number of firms are facing the threat of insolvency.
However, acting quickly and seeking advice from a corporate insolvency practitioner could mean that even when the odds are stacked against a business, some solutions are still available.
By Phil Smith