According to a recent report, the impact of the pandemic on the retail industry is expected to worsen, leading to more store closures. In the UK alone, over 17,500 chain stores and other venues closed their doors in 2020, averaging at 48 closures per day across England, Wales, and Scotland. This marks the largest decline in the industry’s history, underscoring the devastating effects of the Covid-19 pandemic. It’s important to note that these figures only include known permanent closures and do not account for independent retail closures or businesses temporarily closed during lockdowns.
PwC, the organization behind the report, warns that the true impact of the pandemic is yet to be fully realized. Many stores that were classified as temporarily closed but considered open in the research are unlikely to reopen. The fashion retail sector took a particularly hard hit, losing over 1,100 stores in 2020. Shopping centers also saw a significant number of closures.
This year, London experienced a record increase in net closures, surpassing other regions in terms of severity. Together with the South East, these areas accounted for a third of all store closures. Major cities like Birmingham, Bristol, Leeds, and Newcastle also witnessed an approximate 8% decline in the number of chain stores.
The Local Data Company, responsible for monitoring vacancy rates, reported a total of 17,532 closures in 2020, alongside 7,665 store openings. This resulted in a net loss of 9,877 outlets, almost a third higher than the previous year.
Lisa Hooker, the head of consumer markets at PwC, stresses that the full impact of the pandemic has yet to be felt. The data does not include the effects of company restructures and administrations in early 2021, including those of department stores, fashion retailers, and hospitality operators. This could further contribute to the declining state of city center locations. Hooker also points out that the closures happening in 2021, such as those of Debenhams and Topshop, are not yet reflected in the current numbers.
Even before the arrival of Covid-19, closures in the retail industry were already increasing and openings were declining, indicating underlying challenges in the sector. Changing consumer preferences and shifting demand played a significant role in the decline of chain stores, particularly in city center high streets and shopping centers. Local markets and retail parks, perceived as more convenient and safer during the pandemic, experienced fewer closures.
Despite the bleak outlook, Lisa Hooker believes there will be opportunities for recovery as we emerge from the pandemic. She suggests that operators who can identify the right location at the right time may thrive, as discounters and food service chains did after the global financial crisis. These turbulent times have highlighted the importance of adaptability and innovation in the retail industry.
Useful Links:
1. BBC: Retail job losses triple in 2020
2. Retail Gazette: Shopping centers experience record decline
