UK retail in crisis as 50 shops closed down every day in 2022
Nearly 50 shops closed down every day in the UK last year, a 50% increase on 2021 and the highest number for at least five years, while over 151,000 people lost their jobs in both online and bricks and mortar retail. According to new research 2022 was a “brutal year” for the British retail sector and the year that has just started will be just as challenging.
Analysis from the Centre for Retail Research (CRR), a Norwich-based independent organisation founded 25 years ago, shows that about 47 shops on average pulled down their shutters for the final time every day last year.
The total figure for 2022 was 17,145 shops on high streets, shopping centres and in other locations that closed down in 2021, compared to 11,449 in 2021 during the Covid pandemic. Large retail chains closed over 6,000 shops as part of cost-cutting programmes, but the majority of closures (over 11,000) were independent shops that decided to wind up their business.
“Rather than company failure, rationalisation now seems to be the main driver for closures, as retailers continue to reduce their cost base at pace,” said Joshua Bamfield, director, CRR. This trend is likely to continue in 2023 and “a few big hitters may well fail too”.
The economic slowdown and the cost of living crisis has led British consumers to rein in their spending. While footfall declined, retailers had to face the same pressures that households were dealing with: a massive increase in energy prices, tax hikes and high inflation across the board.
The British Retail Consortium (BRC) also said 2022 had been “an exceptionally difficult year for both consumers and retailers”, with sales volumes down compared with 2021.
“The first half of 2023 is also likely to be challenging for households and retailers,” said Kris Hamer, director of insight, BRC. “Ongoing inflation will make sales appear to be rising but we expect falling volumes as consumers continue to manage their spending. We also don’t see many signs at this stage of retailers’ input costs easing, with energy costs expected to rise by £7.5bn as the government’s energy bill relief scheme comes to an end in March, putting ongoing upwards pressure on prices.”
According to Hamer the situation might improve in the second half of 2023, if inflation eases and consumer confidence improves.
From April, retailers will receive temporary support from the government in the form of a 75% discount on business rates up to a limit of £110,000 per business. Shops standing vacant are exempt from rates altogether for three months. After that, however, they are subject to the full rate charge, and are not eligible for the 75% discount on business rates.
The property adviser Altus Group estimates that retailers and landlords will have to pay nearly £1.1 billion from 1 April over the next tax year to cover the business rates on empty sites that have been vacant for over three months.
“Rate-free periods need to be urgently extended to reflect the time that it actually takes to re-let vacant properties,” said Robert Hayton, UK President, Altus Group. “The current woes facing the retail sector mean that empty rates are ripe for modernisation.”