In the midst of a relentless struggle against the twin pressures of escalating inflation and the cost of living crisis, the United Kingdom has witnessed the closure of nearly 2,000 independent stores in the first half of this year. This disheartening surge in vacant spaces marks an alarming reversal of fortune for small businesses, which had previously enjoyed two years of expansion. Fuelled by the pandemic-induced shift towards local shopping and bolstered by government assistance in the form of rent and business rates relief, small enterprises had been thriving.
A comprehensive analysis conducted by the Local Data Company (LDC) has revealed that this year’s decline, amounting to 1,915 outlets across high streets, shopping centers, and retail parks, effectively erases the substantial gains witnessed in the first half of the preceding year, which boasted 1,335 net openings, as well as the 804 establishments recorded during the same period in 2021.
Leading the roster of sectors most severely impacted by these closures, hairdressers bore the brunt, with a net loss of 389 businesses. Estate agents, pubs, fish and chip shops, florists, butchers, newsagents, and car dealerships also found themselves grappling with closures.
Conversely, the resilient sectors that continued to demonstrate expansion included barbers, beauty salons, and convenience stores. The resurgence in demand for affordable indulgences, as office, school, and social activities resumed, has been instrumental in sustaining these businesses. Furthermore, independent vape shops and health clubs have experienced steady growth, underscoring the adaptability of the independent retail landscape.
Within the UK, the regions of the north-east and Yorkshire bore the heaviest brunt of independent store closures, while Greater London stood as the exception, demonstrating greater resilience.
Lucy Stainton, the Commercial Director at LDC, commented on the challenging landscape, stating, “In this year’s macroeconomic environment, it’s our independent businesses that have suffered, especially those high-energy consuming businesses such as hairdressers and pubs. We have also seen a decline in independent estate agents as the housing market slowed against a backdrop of rising interest rates. And with newsagents struggling to compete with the increase in convenience stores and their broader offering, this was another subsector to struggle in the first half.”
Stainton observed that the wave of independent businesses that emerged during the pandemic were less equipped to weather the economic challenges posed by high inflation and reduced consumer spending, particularly given their short time in operation. This predicament has been exacerbated by a decrease in government support.
Martin McTague, the National Chair of the Federation of Small Businesses, weighed in on the issue, saying, “We saw a flourishing of new businesses conceived during the pandemic, which was a real bright spot in a turbulent time, as people suddenly had a chance to put long-held dreams or flashes of inspiration into practice. These new additions helped to counterbalance the businesses that sadly had to close as the economic disruption took its toll. News that many of these newer businesses in turn are encountering difficult trading conditions is worrying but not surprising given the huge challenges facing the retail, hospitality, and leisure sectors.”
In parallel developments, it was revealed that a net total of 2,000 chain stores remained vacant in the first half of this year, mirroring the statistics from the previous year. Cumulatively, British shopping destinations now bear an additional 4,000 vacancies compared to the previous year, driving the vacancy rate to 13.9%, a marginal increase from the 13.8% reported a year earlier.
LDC’s research further illuminated a notable 27% increase in the demolition of retail and leisure sites for redevelopment, indicative of a concerted effort to repurpose long-vacant spaces.
Of note, 41% of Debenhams stores remain vacant with no confirmed plans for redevelopment, a similar predicament faced by half of Philip Green’s collapsed Arcadia empire’s stores. The recent demise of the budget retailer, Wilko, is also expected to contribute to the growing number of empty storefronts on the United Kingdom’s high streets.
