A significant number of chain stores disappeared from Great Britain’s retail locations in 2021. As a whole, 7,655 shops opened, compared to 17,532 closures, a net decline of 9,877.
In the East Midlands, 611 shops opened and 1,298 closed, an internet decline of 687, according to PwC research compiled by the Local Data Company (LDC).
Although a decline was to be expected in a pandemic this is actually the worst ever seen since 2021 with an average of 48 chain stores closing every day, and only 21 opening over the UK.
The findings starkly compare to 5 years ago in 2021, which saw East Midlands shop openings at 750 and with closures at 887.
Worryingly the real impact from the pandemic is yet to be felt as some stores ‘temporarily closed’ during lockdowns, are unlikely to return. But while we wait to determine the full impact of COVID-19 on store closures, its effect on consumer behaviours are driving changes.
Retail parks have experienced the smallest number of net closures associated with a location (77) in the East Midlands, when compared with shopping centres (159) and faring for the worst situation high streets (490).
Footfall was already supporting better in retail parks prior to the pandemic due to their investment in leisure and some retail parks have benefitted when you are anchored by essential retailers which have remained open, even during the tightest restrictions.
But it’s also because they’re considered safer in the present environment: free parking means it’s easy to drive to the location (and steer clear of public transport), outdoor areas mean reduced indoor mixing and greater units allow for better social distancing measures.
Shopping centres by comparison, are often poorly located for consumers who wish to shop local and travel less to city centres, and therefore are more likely to host fashion retailers and chain restaurants, what are number one and thee most hard hit categories for net closure in 2021.
Meanwhile, the drop off in high-street footfall has affected those multiple retailers found on high streets, particularly those in large city centres. However, this decline in multiples has been somewhat offset by growth in interest of local and independent operators.
Small towns, which have long been in decline at the expense of more populous areas and cities, are now also enjoying a mini-renaissance. Consumers would now like to shop in these locations, and larger retailers want to be there.
There is larger regional disparity this year. Looking at absolute figures, London, East and the North West have experienced the most closures, unsurprising given those regions have more chain stores.
However, London has undoubtedly been hit harder than other regions, with a record 5.8% increase in net closures this season. Conversely, Wales, Scotland, East of England and South West, where retail destinations are less highly concentrated, happen to be more protected from closures.
This is a reversal of fortune over the last few years when chain retailers centered on more populous and prosperous regions, for example London and the South East. However, 2021 has seen London and the South East comprising a third of the decline of shops, even despite the South East remaining partly protected through the displacement of London shoppers as commuters work from home.
City centres are now faring worse than suburbs and commuter towns, and shopping centre shops are twice as likely to close as retail parks. This shift in how retail locations happen to be affected is being driven through the number of people working from home.
With fewer people visiting, city centres, for example Birmingham, Bristol, Leeds and Newcastle, have seen a nearly 8% decline in multiple stores. While London does fare slightly better (-7%), its performance is inflated because of the inclusion of its suburbs, along with the City and West End, that have seen footfall decline faster previously year.
Suburbs across the UK have done better, as have commuter towns in the South East and East of England, for example Slough, Orpington, Harlow and Welwyn Garden City. There've also been fewer closures in the smallest towns and seaside towns, for example Scarborough, Eastbourne, Great Yarmouth and Llandudno.
Sarah Philips, Midlands consumer markets lead at PwC, said: “For the first time, we’re seeing a widening gap between various kinds of locations: city centres and shopping centres are faltering, but certain retail parks with the right customer appeal are prospering.
“Location is much more important than ever as we see a turnaround of historical trends. For years, multiple operators have opened more sites in East Midlands cities and closed units in smaller towns. As consumer behaviours and placement preferences change, partly because of COVID-19, retailers are moving to be where they need to be.
“Small towns will stay important, but we can expect recovery in cities as workers and tourists return, albeit in smaller numbers adopting more flexible working models.”
Despite the uncertainty and volatility of the past year, some operators continue to be expanding and finding the right physical stores within the right sector and the right location.
For retail, including convenience, discount or essential operators, general merchandise value retailers that don’t typically sell online, and native services that need to be located nearby, for example tradespeople or repair shops.
For leisure, ‘convenient leisure’ is continuing to grow through takeaways, cake shops as well as coffee shops. However, while coffee shops might traditionally be thought of as city centres units, any decline there has been offset by growth in drive-in coffee houses in retail parks and out of town locations.
Sarah Philips, Midlands consumer markets lead at PwC, continued: “The result of COVID-19 is yet to be seen of all categories as much of the impact we’ve seen this year is a reflection of things that happened before the pandemic.
“This was not just the move online but areas such as legislative changes, e.g. for betting shops, consolidation due to previous overexpansion, or chainwide closures for restaurants and mobile phone stores that found themselves in danger pre-COVID-19.
“The full extent will be revealed within the coming months as many of the CVAs and administrations in the early a part of 2021 still haven’t been captured, including shops, fashion retailers and hospitality operators that will leave big holes in city centre locations.
“Retail and leisure operators must take action to ensure they are in the right places, so they’re not left surrounded by empty units and shopfronts.
“However, there will be big opportunities for growth into the gaps that are emerging. Following the global financial crisis we saw growth of discounters and foodservice chains that replaced exiting retailers. It comes with an opportunity for operators who can find the correct location at the right time to thrive, even despite the current uncertainty.”
Lucy Stainton, Head of Retail and Strategic Partnerships at The Local Data Company said: “2021 has been an undeniably challenging and transformative year for the physical retail and leisure landscape and also the acceleration of chain store closures seen in our latest research is unlikely to surprise many.
“Using the restrictions in place during each of the three national lockdowns, only c.17% of the market was classed as ‘essential’ and thereby able to trade. However, the damage to footfall in some city centre locations especially in London meant that a number of chains opted to temporarily shutter their stores regardless of their ‘essential’ status.
“The question now becomes – have we seen the worst of the damage? These numbers only include store closures we know to be permanent and when government support schemes end, we expect a further increase in store closures before the picture begins to improve.
“Looking at where this opening and closure activity has predominated really tells the story of changing consumer preferences and shifting demand. On the whole, flagship city centre high streets and shopping centres saw a greater decline in chain stores versus more local markets and retail parks which proved to be more convenient and perceptibly safer.
“With this in mind we absolutely believe that following the short-term shake-out, there will be huge opportunity for acquisitive brands who're either looking to launch in different types of locations with new concepts or, take advantage of newly available space in their core markets.”
Rob Moran, Midlands restructuring partner at PwC, said: “Government roadmaps across various parts of the UK are set to reactivate high street shops. But it’s going to look very different post-Covid as businesses will have to weather the dual impacts of permanently changed shopping and dealing environments.
“Companies must also run the gauntlet of rent payments and the return of landlord enforcement powers and creditor finding yourself orders – all whilst trying to bankroll the costs of reopening, general operations, coping with different regional rules and maximising revenues with what is set to be a fiercely competitive market.
“So, although we are upbeat about a bounce back for that high street we will also see restructurings increasing as companies look for sustainable solutions; PwC tracked 29 major CVA launches within the retail consumer hospitality and leisure sectors in H2 2021 alone versus 4 in H2 2021. More follows in 2021 – alongside new tools such as the Restructuring Plan- as UK businesses simply try to survive before they can flourish.”