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Insider UK
Business
Peter A Walker

Scottish store closures slow to almost pre-pandemic levels

Store closures in Scotland are at their lowest rate since 2019, according to new data from PwC and The Local Data Company.

During the first half of this year, 536 Scottish stores closed, while 356 shops were opened – resulting in a net loss of 180 stores managed by retailers with more than five outlets.

With the overall reduction at -1.2%, Scotland’s closure rate has improved from the first six months of 2021, when it was -2.8% and sits just shy of the pre-pandemic rate of -1.1%. However, it remains above the Great Britain average of -1.1%.

The Local Data Company tracked 204,618 outlets operated by multiple operators across the UK between the start of January and the end of June, finding that while the spread of closures between nations and regions is at its lowest for seven years, the proportionate rate of closures in Scotland was fourth fastest of the 11 examined by the study.

Only greater London (-1.3%), the west Midlands and east of England (both -1.4%) have seen a greater net decrease in multiple retailers.

Closures have seen an accelerating trend since the mid-2010s, driven primarily by the shift to online retail and services such as banking and post offices. However, this was offset to some extent due to the rapid rollout of leisure operators, such as casual dining restaurant chains and coffee shops.

A rapid shake-out during the pandemic predominantly affected retailers who had over-expanded, such as restaurant chains and those who failed to adapt their operating models to multi-channel retail trends – most notably fashion.

(PwC)

Leisure operators make up three of the four fastest growing categories in PwC’s latest report.

Takeaways have been boosted by the growth of home delivery, and their ability to operate throughout lockdowns and the pandemic, while the restaurant sector has seen a resurgence as new chains take advantage of the ability to expand quickly into empty spaces and take advantage of lower rents and pent-up consumer demand.

Similarly, amusement arcades have also benefited from the availability of vacant units and lower rents to open particularly in suburban areas and seaside towns.

While not categorised as leisure, DIY shops have also taken advantage of home improvement trends formed during lockdowns.

On the opposite end of the spectrum, four categories experienced a decline of more than 100 units across the UK, including banking and financial services, which continues to be impacted by the longer-term withdrawal of physical branches and the shift to online banking.

Charity shops, which have historically taken advantage of vacant retail space in order to expand, have fallen victim to the shift to online shopping and emerging digital marketplaces for 'pre-loved' items.

While still seeing a decline, the closure rates for betting shops (266 net closures) and fashion retailers (128 net closures) has improved significantly in comparison with previous years.

(PwC)

Jason Higgs, head of retail for PwC Scotland, said: “It’s heartening to see sectors and categories which bore the brunt of the impact of lockdown restrictions, like restaurants, become some of the fastest growing categories within our analysis, and it’s evident that outlets like DIY stores and takeaways are responding positively to the trends and opportunities that emerged during the pandemic.

“There’s no doubt that our high streets and city centres have changed,“ he continued. “Glasgow and Edinburgh for example have capitalised on pent-up consumer demand for leisure pursuits, with the capital in particular responding to the growing appetite for destination retail and leisure with the continuing development of St. James’s Quarter, tempting consumers away from their screens by providing an experience across multiple categories.”

Lisa Hooker, industry leader for consumer markets at PwC UK, said: “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.

“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.

“Success is also likely to depend on the focus of a new Prime Minister, and how they intend to help high streets.

“Business rates, for instance, will be critical for operators, and it will depend on how they are reformed in the near future (if at all). To truly level up, the challenge for local leaders - working with businesses and communities - is to create places that work for all those who visit, live or work there.”

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