PwC’s latest Store Openings and Closures report found there had been a deceleration in closures by almost half compared to the pandemic at its peak (34 closures per day H1 2022 v 61 closures per day H1 2020). Openings, on the other hand, have stabilised but are yet to start showing signs of any notable increase (21 openings per day in H1 2022 v 32 per day at its peak in H1 2017).
The recovery, said the report, is being driven by leisure categories helped by release of post-pandemic pent-up demand.
Leisure operators make up three of the four fastest growing categories in the report, each for varying reasons:
Takeaways have been boosted by the growth of home delivery, which has made stores more viable. Additionally, strong, branded chains are often franchises – which can be owned and operated by local entrepreneurs. Complimented by the ability to operate throughout lockdowns and the pandemic, there are strong brands meeting emerging consumer needs – which are ripe for growth.
Restaurants have been one of the worst performers in the past three years. While administrations and restructurings closed many branches of large chains en masse, new chains have been able to expand quickly into empty spaces and take advantage of lower rents and pent-up demand post-lockdown.
Amusement arcades have taken advantage of vacant units and lower rents to open particularly in suburban areas and seaside towns.
While not categorised as leisure, DIY shops, including trade counters, have taken advantage of home improvement trends formed during lockdowns.
PwC stated that 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 roll-out of leisure operators, such as casual dining restaurant chains and coffee shops.
“We saw a rapid shake out during the pandemic (2020 and 2021), predominantly affecting retailers who had overexpanded, such as restaurant chains, and those which had not adapted their operating models to omnichannel – notably fashion,” the report stated.
Elsewhere, structural decline in some categories showed no sign of letting up with the report seeing only four categories seeing a 100+ net decline in units.
Banks and financial services (199 net closures) have featured in the top 10 fastest declining outlets for the past seven years, except in 2020, when they were eclipsed by other retail categories at the outset of the pandemic. Longer-term withdrawal of physical branches, combined with the shift to online banking and digital services is likely to see this trend continue.
Historically, charity shops (199 net closures) have been able to expand into vacant retail space. But this is contrasted with two issues that they have been unable to avoid: the shift online for shopping and emerging digital marketplaces for preloved items; and staffing issues due to a typical reliance on older volunteers.
For betting shops (226 net closures) and fashion retailers (128 net closures), their closure rate has improved significantly compared with previous years: H1 2021 saw 1,063 fashion retailers closed, driven by multiple high-profile administrations during the pandemic; while 862 betting shops closed in H1 2020, primarily driven by legislative changes.
