Scotland’s high streets blighted with closures as retail landscape faces new future
The number of store closures across Scotland’s high streets has fallen to its lowest level in the last six years, but the country’s most popular shopping areas are still seeing more than five stores per week close their doors.
The performance in 2018 means there has been a net loss of more than 500 stores across Scotland’s eight largest retail centres since 2013, with 1,816 closures being offset by just 1,281 openings.
The latest report by the Local Data Company for PwC reveals that 265 shops closed across key towns and cities in Scotland last year as the retail sector continues to grapple with the growth in online shopping and wider economic uncertainty. In contrast 146 new stores opened, resulting in 119 net closures, a net change rate of -3.65%.
This improvement from -4.48% in 2017 means Scotland is the only one of 11 nations and regions in Great Britain to see a drop in net closures in 2018. However last year’s net closure number remained higher than in any other year since the data was first gathered in 2013.
|Businesses Dec 2018||Units Net Change||Openings||Closures|
|Edinburgh (inc. Leith)||1,037||-32||36||68|
The net change across Great Britain was -3.6% with a record net 2,481 stores disappearing from the top 500 high streets in the full year. A total of 3,372 shops opened, compared to 5,853 closures. The net loss in 2017 was -1,772 stores.
Closures in 2018 were driven by a number of high profile failures while a shift in consumer preferences towards in-home leisure have exacerbated the impact on the sector, not only leading to closures but also discouraging new openings.
Mark Addley, Head of Business Recovery Services for PwC in Scotland, commented:
“We may have seen a reduction in the number of stores closing across Scotland, but this is coupled with store openings at almost half the total we were seeing five years ago, so there remain enormous challenges across our high streets.
“We have already seen casualties in 2019 and we fully expect to see more, with retail companies facing an uphill battle to survive, never mind thrive. To be in the best possible shape to get through this, retailers must focus on ensuring they have the right proposition, and the investment required to deliver it.
“In the immediate term, retailers need full-scale solutions which sustainably cut costs and allow for new money investment to bridge the lag between the cost of a restructuring and long-term performance improvements, all while fully addressing the needs of their customers.”
The data show that the number of stores have been steadily decreasing since 2013. In 2013, a total of 303 stores closed their doors, rising to 312 the following year. This fell to 280 in 2015 before peaking at 366 in 2016. In 2017, the number of closures fell back to 290 – but a huge reduction in new openings led to a record net loss of 148.
Each Scottish area analysed in the study has fewer shops than last year. Edinburgh, including Leith, saw a net loss of 32 stores, to 1,037 while Glasgow also saw a net loss of 32 to 875. In Aberdeen there was a net loss of 27 to 450.
Fashion was hit particularly hard in Scotland, with a -6.3% net change in the number of fashion store closures, which eclipsed any other part of Great Britain. Scotland had fashion 283 stores at the end of 2018, down 19 on the previous year as a result of 30 closures and 11 openings.
Mark Addley added:
“From business failures to store closures and company voluntary arrangements (CVAs), we continue to see the impact of a high street in a state of change. With consumers continuing to migrate to online shopping there is a need for a societal conversation on the role of the high street and how retailers and landlords can best service this.
“The high street of the future will not be solely dependent on traditional stores. Across Great Britain, we are seeing a growth in the numbers’ of gyms and ice cream parlours for example. We need more of this new way of thinking. The relatively low number of openings means our high streets are becoming more blighted with empty store-fronts, so decisions will need made on what exactly a high street is for in 2019 with local authorities and landlords having to consider repurposing sites.”
The picture across Great Britain
Looking across Great Britain on a category basis, only 15 out of 100 business types showed a net growth in outlets numbers, and only five categories showed net growth in double digits. Categories that have been amongst the risers in previous years, such as coffee shops, food to go, takeaways, jewellers and beauty shops, have all seen net declines in 2018 as overcapacity and economic conditions bite.
The roll out of gyms leads the growth categories, as high streets begin to pivot away from retail; while other growth categories are dominated by entertainment and indulgence, with bookshops, ice cream parlours and cake shops all in the top five.
Conversely, the top 10 declining business types is dominated by retailers and service businesses most affected by the shift to online. These include fashion and electrical retailers, many of which have lost share to prominent online retailers.
We have also seen a slowdown in leisure, in particular restaurants and pubs, which in total saw a net loss of 506 outlets, reversing three years of consecutive growth since 2015. Market saturation, cost challenges, and a shift in consumer preferences towards in-home leisure have exacerbated the impact on the sector, not only leading to closures but also discouraging new openings.
The impact of CVAs and retail administrations has introduced new categories to the fallers list. As well as high profile CVAs and administrations in fashion and restaurants, electrical goods and value retailers make the top 10 list for the first time.
Lisa Hooker, consumer markets leader at PwC, said:
“The results are clear – 2018 was a turbulent year for retailers with a number of high profile store closures. We saw an acceleration in footfall decline on the high street with businesses continue to see the impact of online shopping, increasing costs and subdued consumer spending.
“We know that the high street is seen as a barometer for wider economic issues, and there are signs that Brexit is affecting how we spend. Two in five consumers tell us Brexit will affect their spending this year, with half of those saying they’ll spend less, and a third saying they’re postponing big ticket purchases.
“It is interesting that it is the marked reduction in openings that has accelerated the net closure trend. In store categories as diverse as fashion retailers and financial services, new entrants are able to gain share by launching online, enabled by technology and consumer adoption of mobile and e-commerce, rather than be saddled with the costs and risks of opening on the high street.
“However, high streets still have an important role to play. For example, consumers told us that half of their Christmas shopping spend was done in physical stores. But given the continued trend to shopping online, retailers, landlords and policymakers need to think about the amount of space dedicated to retail. We believe that in future Britain will need less, but better invested, high street space that gives consumers variety, service, convenience, ease of access, entertainment, and, above all, a reason to visit.”