When we think of the most important businesses in the UK economy, how many of us consider the shops on the high street or the stores on out of town developments?
When we wheel our trolleys around the supermarket during our weekly shop or browse within our local independent shops, do we consider the impact that the retailing sector has on the UK economy?
Yet retail is critical in both generating wealth and creating employment and despite the impact that the Covid-19 pandemic had on the sector, it continues to employ more than three million people across the UK and contributes nearly £100bn to GVA annually.
As we all know, Covid had a major effect on the sector as politicians restricted access to stores and, in the case of independent shops, shut them completely. Not surprisingly, this led to a surge in online shopping and predictions that this would signal the end of the traditional retail sector.
Yet, the latest data has shown that nearly three quarters of shopping is offline with consumers returning to shops after the pandemic, resulting in an increase of 7.8% in retail sales value in 2021 after a decrease of minus 2.5% in 2020.
One of the most important indicators of the health of the retail sector is the data published from PWC and the Local Data Company. Their latest study released this week examined the most recent data on multiples namely retailers that have five or more outlets nationally. The good news is that their research suggests that although more than 6,000 stores were closed in the first half (H1) of 2022, the previous slowdown in closures across Great Britain has slowed down.
But what does this data tell us about the Welsh situation and has large scale retail recovered in Wales?
It shows that the national picture is largely replicated here with the data showing that in the first six months of this year, a total of 253 shops belonging to multiples and chains left Welsh high streets, shopping centres and retail parks, the fewest since 2017.
Equivalent to 21 closures per month, it’s a very different picture to that experienced during the height of the Covid pandemic in Wales where 37 stores per month were shut in the first six months of 2020.
Despite the slowdown in closures, there still seems to be a reluctance by big chains to launch new outlets and in the first half of 2022, Wales has had only 153 stores open (or 13 per month), significantly down on the 226 (or 19 per month) in the first half of 2017.
However, overall net closures in Wales are the smallest since 2019 (equivalent to only eight net closures per month), and lower than the level seen in 2020 and 2021 ( minus 18 and minus 14 net closures per month respectively).
This seems to be good news for the high street although if we examine Wales against the rest of Great Britain, it is still recovering more slowly than most other regions.
For example, between the first six months of 2021 and the same period in 2022, the number of new retail openings increased across Great Britain by 11% although it continued to decline in Wales (minus 7%) with only the West Midlands ( minus 29%) having a worse performance. This contrasts with significant growth in new openings in the South West of England (48%), North East England (33%) and South East England (31%).
Therefore, whilst there is some recovery in retail in Wales, this seems to be at a far slower pace than the rest of Great Britain. The issue is whether this is merely Wales lagging the rest of the economy in recovering its retail sector after Covid, possibly due to more stringent regulations at the time, or a continuing trend with Welsh high streets being seen as less attractive to multiples looking to open stores?
With an economic recession on the horizon, this latest data does not suggest the retail sector in Wales is back to its strongest position although the Covid pandemic may have cleared out the less profitable shops and, as a result, most multiples will now be in a stronger position to weather any economic storms over the next 12 months.
There is also the question as to whether the exodus of multiple stores from Welsh high streets is resulting in more independent shops and other types of businesses moving in to replace them. At this stage, there seems to be very little evidence of this happening and it may require greater imagination from planners if our town and city centres are to be revitalised.
With the Welsh Government promising its own retail strategy soon, this data suggests that the multiple retails sector in Wales remains still in a precarious position and is certainly not back to the situation that it was experiencing before the Covid pandemic when, even then, the number of closures outnumbered those stores being opened.
With retailing being the largest in Wales with 114,000 employees and accounting for a higher level of GVA than for the UK as a whole, it has been neglected for far too long in recent years by policymakers and given the early signs of stabilisation if not growth in the sector, more needs to be done to ensure that retail employers of all sizes are supported to continue to make an impact on the Welsh economy.
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