High Streets Initiative · 14 September 2017

Britain sees sharp decline in shop openings in 2017

Rustic Open Sign
Q2 saw the biggest drop in UK shop opening numbers, in two consecutive quarters, in the past five years

The second quarter of 2017 saw the number of shop openings across Britain fall be 84 per cent compared to the same period in 2016, new retail figures have found.

The slowdown in UK shop openings resulted in a net loss of 69 shops in the second quarter of the year, compared with a net increase of 428 shops in the first three months of 2017.

The net difference between this year’s first and second quarters – of -497 shops – is the biggest drop in the number of shop openings the UK has experienced, in two consecutive quarters, in the past five years.

While showing volatility over time, the retail statistics, collated by the Local Data Company in the latest issue of its bi-annual report on the state of the retail and leisure industries, show that overall the number of shop openings has fallen significantly.

From the 2012 quarterly UK average of 4,006 shop openings, in the second quarter of this year the figure has fallen by 25 per cent to 2,995 openings.

Commenting on the fall in shop openings, LDC spokesperson Matthew Hopkinson said: “There was a striking turnaround in the second quarter of 2017, especially when compared to the trends of 2016.

“The impact of Brexit is clear with Q2 showing a net loss of nearly 500 shops versus positive growth in the previous quarter. Not only has the trend turned negative with more closures than openings but the volume of activity has also dropped by 25 per cent.”

Hopkinson also noted the rise in shop vacancy rates in the second quarter of 2017 as a potential point of future concern for the retail sector.

By June, the UK average shop vacancy rate had risen to 12.2 per cent, with new vacancies (shops that have stood vacant for less than a year) also increasing from 3.3 per cent to 3.7 per cent of the total number of shops since the start of the year.

The report also revealed where new UK shop openings are most likely to occur. Retail parks, for example, have experienced more net openings than high streets or shopping centres, but remain the venue for just 2.5 per cent of the country’s shops overall.

High streets in town and city centres still house just over half of all retail and leisure stores in the UK, while independent shops have generated 89 per cent of the net growth in shop numbers since the first half of 2013.

Hopkinson went on to say that retail industry changes in the first half of 2017 clearly demonstrated the uncertainty that currently run through the UK economy. He said that the number of openings and closures of stores was likely to increase further still, as shorter leases and more proactive management by landlords becomes the norm.

He added: “Stores continue to perform a vital role in the purchase cycle and consumer journey, but the key questions remain around how many shops you need, what kind of format and in which locations.

“With rising costs everywhere for retailers, margins are being squeezed and therefore understanding these micro to macro location trends is fundamental for retailer success.”

This article is part of a wider campaign called the High Streets Initiative, a new section of Business Advice championing independent and small retailers by identifying the issues that put Britain’s high streets under pressure. Visit our High Streets Initiative section to find out more.

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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.