PwC’s study of 500 UK high streets and 66,961 outlets operated by multiple retailers also shows that store openings in the first half of 2018 dropped by a third to 1,569.
With 2,692 store closures between January and June, UK high streets saw 1,123 stores disappear in 2018 compared to 222 in the first half of 2017.
PwC consumer markets leader Lisa Hooker said: “Openings simply aren’t replacing the closures at a fast enough rate. Specifically, the openings across ‘experiential’ chains, such as ice cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories.”
South East and Greater London were worst hit by the store closures, followed by East Midland, West Midlands and North East.
The best performing region in the first six months of the year was Wales, with 30 new store openings and 52 closures.
Closures affected mostly fashion stores (269 store closures) and electrical outlets (52 store closures) affected by online shopping and ‘increasing consumer preference for in-home leisure’. This shift in consumer behaviour also affected pubs (170 store closures) and the restaurant sector (50 store closures).
Supermarkets saw the smallest number of store closures as only six stores closed compared to 14 new openings.
Hooker added: “Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.
The impact of company voluntary arrangements (CVA) and retail administrations has led to electrical stores and Italian restaurants joining PWC’s ‘fallers list’.
This is mainly due to the collapse of Maplin, which saw 50 stores disappear from the 500 locations assessed by PWC, as well as CVAs announced by Jamie’s Italian and Prezzo, in addition to Strata closures.
PwC retail restructuring partner Zelf Hussain said: “The number of distressed businesses in 2018 has led to a spike in company voluntary arrangements. We believe that CVAs can be helpful restructuring tools, but alone are insufficient. Our own research of more than 101,710 companies listed on Company House shows that of the 65 retailers entering into a CVA between 1987 and 2017 more than half (51%) failed, leading to another insolvency process.”
Exasol CEO Aaron Auld said: “With new research showing up to 14 stores are closing a day, the high street is now in crisis. Retailers are coping with razor-thin profit margins, increasing the pressure to deliver for customers at any time, any place, at the right cost, and personalised to them. Big e-commerce brands are continuing to set the standards for omnichannel and customer experience, and more than half of retailers still lack the all-important customer view.
“Now, in the Golden Quarter, it is more important than ever to drive forward a customer-centric data-driven strategy if retailers are to compete with the success of digital-first platforms such as Amazon. But despite customer experience becoming a mantra for leading retailers, research by Exasol shows that many retailers have not yet implemented a strategy that provides a holistic view of their customers, and only 46 per cent use data analytics to better understand their customers’ behaviour and needs across channels.”
In this year’s Autumn budget, Chancellor of the Exchequer Phillip Hammond announced a £675m future high streets fund to support physical retailers, enabling councils to “support local areas to prepare long-term strategies for their high streets and town centres” and to “invest in the improvements”.