Expect more blood on the High Street as stores closures mount

January 6, 2023

Napoleon would struggle to call England a nation of shopkeepers these days, if the relentless woe in the retail sector is an indication of things to come.

The Centre for Retail Research isn’t hopeful. It expects up to another 18,000 UK shops to close this year – around 50 per day – after 17,000 closed in 2022, a five-year high beating even the peak of the Covid period. Retail job losses last year rose by more than 40% to 151,000 as Debenhams closed its doors, convenience store McColl’s was bought from administration by Morrisons and Joules was plucked from the same position by Next.

Analysts point to soaring energy costs, wage demands and other elements of cost inflation. However, the retail sector has been undergoing major structural change since well before Covid closed stores for months and turned already thin margins into losses.

The High Street’s death by a thousand cuts is symptomatic of seismic change in many consumer sectors, an ongoing shift in shopping patterns that will continue to remove capacity from the town centres until retailers take drastic steps to adapt to the new order. Retailers will continue to shrink unless they provide an engaging in-store experience for millennial consumers who have almost grown up shopping online. Most of these need a very good reason to venture beyond their front doors to partake in discretionary shopping as a leisure activity.

Throw in high rents, business rates, data security, investment in store technology, price wars and permanent ‘Sale’ periods, not to mention logistics and the presently disjointed supply chain, and it’s clear that business owners and management teams are having to keep moving just to stand still.

Operators in this tough sector, from owner-managed single store units to national chains, must develop creative and flexible strategies to protect themselves from seemingly endless volatility. In that way they might stand a chance of succeeding when trading environments become more benign. Retailers should, sooner rather than later, seek professional advice on tenancy and rent issues, store closures, stock control and working capital, technology and operating efficiencies, relationships with suppliers, and support with banking arrangements.

The insolvency toolkit offers several options for breathing space to put retail businesses on a sounder footing. Managers wishing to explore these shouldn’t hesitate to get in touch with us for a free initial consultation.

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