UK High Street growth slows
Research shows the acceleration of High Street store closures, with closures having overtaken openings
Shops, big and small, are shutting down once more. In the first half of 2015 more closed than opened for the first time in the past five years, reveals new research from the British Independent Retailers Association (bira) and the Local Data Company (LDC).
Since 2010 the net number of independents has grown, adding more than 7,000 extra shops to the High Street and providing the only significant driver of reduction in the vacancy rate of shops. This has been a lifesaver for town centres in a period in which multiples have consistently shuttered shops – as they continue to do.
Now the High Street has run out of road.
The number of openings of independents has remained fairly consistent since the crash, at about 15,000 a year in this wide sample, indicating about 30,000 in the wider economy. But closures have been accelerating. This year they have caught up with and overtaken openings.
Every region in the country has seen a fall in numbers in the first half of this year, with the welcome exception of the North East, which recorded a tiny net gain of shops. Independents as a whole fell nationally by 144 but in the first six months of 2014 they rose by 289. Not a lot in a sample of 104,715, but disastrous in comparison to a gain of over 3,600 in 2011 and a clear sign of what’s in store.
The (relatively) good times are no longer rolling.
Prices in shops have been falling for more than two years, faster than inflation measures such as CPI. The costs of employing people and occupying property continue to rise ahead of inflation. Six out of ten shop leases are due for renewal, or not, by 2017 and the end of a lease is the most frequent cause of the closure of a shop. When the Chancellor makes his Autumn Statement on November 25 and reports on his next set of conclusions about the future of business rates this should be in the forefront of his thinking.
If he does not announce a fundamentally helpful reform of this damaging tax, which bears disproportionately on retail, this trend towards shop closures will accelerate. And if he does not renew the £1,500 discount for small retail and leisure businesses, small business rate relief and the small business multiplier for next year then he could trigger a crisis that will drive the high street back to the bad old days of five years ago.