The pace of store closures in the UK has accelerated in 2022 as Covid-era support measures are withdrawn, with streamlining rather than insolvency being the main reason for store closures, a study has found.
The Center for Retail Research found that more than 17,000 stores closed last year, equating to 47 a day, the highest total in five years. Figures are gross and do not take into account new store openings.
The CRR said 11,636 closures were due to rationalization programs by large retailers or independents simply closing up shop for good, while 5,509 were due to some form of insolvency proceedings.
Professor Joshua Bamfield, Director of CRR, said streamlining appeared to be “the main driver of closures as retailers continue to reduce their cost base at pace”. He expects the trend to continue in 2023.
The CRR said store closures due to business collapses, such as those at Debenhams and Arcadia, which were both liquidated in 2021, fell 56% last year.
Major retail insolvencies in 2022 included convenience retailer McColl’s and lifestyle group Joules. Both companies were rescued, but 19 Joules stores closed as part of the administrative process and McColl’s new owners have since announced plans to close more than 100 outlets.
Retailers have received significant government support during the coronavirus pandemic, including the furlough scheme which allowed them to retain staff, the ability to delay payment of value added tax and exemptions from business rates.
However, this support has diminished throughout the year, with business rate support now subject to a cap that significantly reduces its value to large retailers.
Like other sectors of the economy, retailers have been bitten by rising labor costs – the UK’s statutory minimum wage has risen by more than 6% to £9.50 from the UK. hour in April – and the sharp rise in energy prices, triggered by Russian weapons gas. supplies in connection with its war in Ukraine.
The wider recruitment crisis has also affected retailers, with the ONS estimating there were 91,000 vacancies in the sector in the three months to November.
Almost two-thirds of the closures cited by the CRR were of independent operators – defined as those with fewer than 10 stores. However, other retail market studies indicate that in many sectors, closures have been more than offset by the start-up of new independent businesses.
The Local Data Company said in September that independent operators had opened a net 1,335 units in the first half of 2022, although that figure includes hospitality businesses and services, such as barbers and tattoo parlors, as well as retail Retail.
The number of units occupied by independent non-food retailers fell just 0.1% in the first half, he found, while the number of independent convenience stores rose 1.6%.
CRR data revealed that store closures were accompanied by the loss of more than 150,000 jobs, a 43% increase on the previous year, although this includes jobs lost at online retailers uniquely.
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