THE net shop closure rate in Wales has hit a six-year high – but retailers are weathering the difficult trading conditions better than Scotland and most English regions.
Analysis from professional advisory firm PwC and The Local Data Company (LDC) shows there were 384 openings and 786 closures in Wales in 2021 - a net lose of 402.
However, the 4.4% closure rate is below the average rate for the UK at 4.7% and significantly lower than regions like London and the West Midlands which saw the biggest changes to consumer behaviour as a result of the pandemic.
Overall, the report concluded that Welsh retailers have fared better against the challenging trading conditions compared to Scotland and all but three English regions: the East Midlands, the North East and Yorkshire and the Humber.
Overall, the report concluded that Welsh retailers have fared better against the challenging trading conditions compared to Scotland and all but three English regions: the East Midlands, the North East and Yorkshire and the Humber.
As part of the analysis, the Local Data Company tracked 203,718 outlets operated by multiples (retailers that have five or more outlets) across the UK between 1 January and 31 December 2021.
The Local Data Company visited high streets, shopping centres and retail parks across the UK to obtain data on its occupancy status whether occupied, vacant or demolished.
The analysis found that location has been an important factor with retail parks have consistently outperformed shopping centres and high streets for the past six years.
Since restrictions lifted footfall recovery has been much faster in out of town retail parks which benefit from easy access and good parking - bolstered by car travel which recovered quicker than public transport.
In 2021, retail parks throughout the UK saw the smallest net change (openings minus closures) of any location with a net closure rate of -4% (593) compared to high streets at -5% (4,287) and shopping centres at -7% (1,690).
Shopping centres have been hit hardest with closures of fashion retailers, department stores and restaurant chains meaning they have become less attractive destinations in their own right.
They have now become the worst performing locations in 2020 and 2021, a sharp fall from being named the second best performing locations in 2015.
Jason Clarke, assurance and private business lead for PwC in Wales: “There’s no denying that trading conditions for retailers in Wales continue to be difficult; we saw evidence of the ongoing march towards e-commerce in the 2021 failure of a number of high street giants, many of whose brands were bought from administration and stripped of their physical stores.”
He added: “And as more consumers work flexibly or in hybrid patterns, city centre retailers face a struggle to drive footfall to brick-and-mortar establishments. But 2022 should be a better year for retailers as we start to step into the post-pandemic world. If retailers and local authorities can learn from retail parks, which fared comparatively well in 2021, we may see the gap between closures and openings drop in 2022.”
Across the UK, the report found over 10,000 chain store branches disappeared from retail locations in 2021. In total, 7,160 shops opened compared to 17,219 closures meaning a net decline of 10,059 according to PwC research.
The net change has worsened since 2020, but the number of closures per day has remained stable at 47 in 2021 compared to 48 in 2020.
There were over 7000 new openings in 2021, but PwC said many of these were the “natural churn and re-siting of existing stores”.
The rate of closures has been growing since the mid-2010s as more retail and service categories have shifted online. Store closures peaked in 2020 in the height of the pandemic.
This had previously been offset by the rapid rollout of leisure operators such as coffee shops, food-to-go and restaurants, but these openings have slowed down rapidly since the mid 2010s.
However, the number of closures is now expected to slow down through 2022 as the last two years have seen a shake out of some large fashion and department store chains who were on the brink of collapse.
Consumer markets lead at PwC Lisa Hooker said the last two years have been tumultuous for retailers but the closures are an acceleration of what was happening before the pandemic.
Ms Hooker said: “Changes in consumer behaviour, changing patterns of working and the shift to online is impacting on both retail and service chain operators. Location matters most to consumers and whilst city centres and shopping centres falter, retail parks and standalone operators have broad appeal. Multiple operators are taking note of this changing consumer behaviour and are relocating stores to where their customers need them to be.”
Ms Hooker added: “Many of the CVAs and administrations that took place in early 2021 have now been captured, including department stores, fashion retailers and hospitality operators that have left gaps in city and shopping centre locations.
“There is a pressing need to radically reshape and even repurpose towns and city centres plagued by these empty units and shopfronts. To regain lost footfall, high streets must understand why retail parks are so attractive to consumers or look for ways to better serve local needs, encouraging independent retailers and entrepreneurs to take this opportunity to grow into the gaps that are emerging.”
