By Daniel Hunter
Great Britain’s multiple retailers closed 20 stores a day on average across the UK’s top 500 town centres in 2012, according to data compiled for PwC by the Local Data Company (LDC).
From a net increase in 2009 of 1.2%, multiple retailers have for the second consecutive year shown a decline in their numbers from -0.25% in 2011 to -2.7% in 2012. Year on-year, the net reduction in the number of stores climbed more than tenfold from 174 closures in 2011 to 1,779 closures in 2012.
The data also revealed that across multiple retailers in 500 town centres card, computer games, clothes, banks, health foods, jewellers, travel agents, recruitment agencies and sports goods shops have been amongst the hardest hit in 2012. Pound shops, pawnbrokers, charity shops, cheque cashing (payday loans), betting shops, supermarkets and coffee shops bucked the trend showing growth during the year.
Analysis of the three months between December 2012 and February 2013 shows that the potential rate of closures- principally through administrations- would accelerate to 28 per day for this period.
Mike Jervis, insolvency partner and retail specialist, PwC said: “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. A number of them had failed to deal with their underlying issues by hiding behind light touch restructuring processes, especially Company Voluntary Arrangements. 2013 has seen the downward trend become even worse.
“If underperforming retailers are to avoid becoming part of these statistics for next year, their shopping baskets should contain an acute knowledge of their customers and their customers' needs; robust cashflow planning; honest analysis of the performance of existing and potential new stores; the bravery to admit mistakes regarding products and stores before dealing with them; clinical attention to costs; early engagement with banks, landlords and suppliers; appropriate debt and capital structures.”
Christine Cross, chief retail adviser to PwC said: "Although the figures are more disappointing than many had hoped, we have to acknowledge that several of the companies with closures had anticipated these for some 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.
“While rates remain high, there is still a need for retailers to address cyclical cost increases and, even more, structural changes in ways of doing business. Today’s customer does not differentiate between where they heard about, researched, saw, purchased or returned a product. They expect to be able to effect every part of the shopping transaction from any channel. This is the age of the total retail experience and it demands a very different operating model to be successful.”
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