High street chains have closed almost 6,000 stores so far this year, according to the Centre for Retail Research, which also revealed that retailers with 10 or more stores have already closed 5,834 shops in 2019 – up 77% on the whole of last year.
Some 708 shops have been closed by large retailers falling into administration in the year to September 30, while a further 333 shops were closed through CVAs. In the first nine months of 2019, 2,531 more shops were closed by large retailers than the 3,303 closed during the whole of 2018, while a further 4,793 shops have been shuttered by large retailers through “rationalisation” as part of cost-cutting programmes.
The report says the numbers are caused by high costs, low profitability, and losing sales to online shopping. These problems are felt by most businesses operating from physical stores, in high streets or shopping malls. The low growth in consumer spending since 2015 has meant that the growth in online sales comes at the expense of the high street.
The reasons for the issues facing retailers with physical shops are discussed extensively in our report Retail At Bay. The key issues are as follows
- The high costs of running retail outlets, including rents, business rates and high labour costs;
- Low profitability caused by high costs, slow growth in sales, squeezed profit margins and heavy price competition;
- The rapid growth of online competition such that by 2018 online sales accounted for around 18.4% of total retail merchandise sales, with much of online growth achieved at the expense of bricks-and-mortar retailers.
- Lack of preparation: low investment in stores and weak forward planning to meet the challenges of the new retailing.
The retail crisis in jobs, businesses, stores and high streets has been coming for a long time. Retailers who sell from physical shops have found consumer spending and profitability has been hit hard.
Details about where the job losses and store closures have come from:
Outcomes for 2018 (twelve months)
|specific redundancies & rationalisation||NA||NA||19,112||19,112|
|multiples’ stores closed||1,631||272||1,400||3,303|
|multiples jobs lost (store closure)||22,671||3,900||11,862||38,433|
|multiples in companies||43||8||36||83|
|self-employed/concessions in larger shops||1,300||2,200||1,350||4,850|
|Independent businesses affected||9,500||9,500|
|independent job losses||68,608||6,716||75,324|
Outcomes for 2019 (to October)
|specific redundancies & rationalisation||NA||NA||6,900||6,900|
|multiples’ stores closed||708||333||4,793||5,834|
|multiples jobs lost (store closure)||9,115||24,042||40,252||73,409|
|No. large/medium businesses affected||36||11||35||71|
|self-employed/concessions in larger shops||890||2,503||1,636||5,029|
|Independent businesses affected (e)||6,825||376||7,201|
|independent closures (e)||9,750||753||10,503|
|independent job losses (e)||41,800||3,010||44,810|