Store closures in the North East have slowed to their lowest rate in five years, though experts have warned that the cost-of-living crisis could create fresh problems for the retail industry.
The PwC Store Openings and Closures report for the first half of 2022 found that 257 chain stores closed in the North East while 186 opened. The net change of 71 closures is the best performance for the region’s retail sector since 2017, though it still means a decline in the number of shops.
And authors of the report, which is compiled with The Local Data Company, have warned that rising costs for retailers, coupled with customers having less money to spend, could signal a tough time for shopowners in the coming months.
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The retail sector took a massive hit in the pandemic, with closures in the first half of 2020 happening at more than 10 shops each week. The new study shows that takeaways have been boosted by the growth of home delivery, while there has also been a growth in DIY and trade counters to take advantage of the home improvement trend that started during lockdowns.
But there have been big closures in bank branches, while charity shops have been hit by people being able to sell unwanted items online and issues around older volunteers who often run the sops.
Lisa Hooker, industry leader for consumer markets at PwC UK, said: “A reduction in closures and growth in openings give some reason for optimism, but any positivity must also be viewed alongside the significant concerns over the rising cost of living and how it will impact people’s ability to spend. In addition to pressures on consumer demand, we mustn’t also forget that increasing utility, input and labour costs will significantly affect the viability of all high street businesses.
“While the outlook is better than it was during the height of the pandemic, it’s worth noting that the numbers still show a decline, with our net numbers equating to 12 closures a day in the first half of this year. Added to that, retail footfall remains 10-15% below pre-pandemic levels and openings lack momentum - particularly outside leisure.
“With soaring prices for food, petrol and utility bills, inflation at a 40-year high and the Bank of England warning the UK will fall into a prolonged recession at the end of this year - this will impact everyone, and is only expected to deepen. We’ve already seen it impact Consumer Sentiment this year, and retailers and operators must help consumers mitigate their financial challenges now, while protecting themselves from the financial squeeze.”
Lucy Stainton, commercial director at The Local Data Company, added: “This latest data tells a story of continued recovery, with the gap between openings and closures the smallest it’s been since the first half of 2017 - despite the end of Government support packages in March, supply-side issues due to the ongoing war in Ukraine and rising fuel prices. The number of empty units across high streets, shopping centres and retail parks continues to decline, as we see the holes left behind from a litany of CVAs and insolvencies being either reoccupied or repurposed due to the new planning laws on converting retail property to other uses.”
The report outlines how closures have been accelerating since the mid 2010s, fuelled largely by a shift to online services.
The pandemic brought a shakeout of over expanded businesses like restaurant chains or fashion retailers, according to the report. Closures peaked at around 61 per day nationally in the first half of 2020 but that rate decreased to 34 per day in the first half of 2022.
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