Expert comment: UK shop closures hit five year high

The Centre for Retail Research has reported that on average nearly 50 shops a day permanently shut their doors in 2022. This is evidence, if any were needed, that in the era of the poly-crisis high street retail performance is also a very visible and ready indicator for household wellbeing. And the OECD (Organisation for Economic Co-operation and Development) confirmed that household wellbeing by the first quarter of 2022 had put the UK below all of the G7, barring Germany, in terms of household disposable income as a percentage of primary income.

By the second quarter of 2022, the UK was the lowest amongst all G7 countries in terms of real household income per capita. This has been a downward trend since 2019 and one that is in stark contrast to some G7 countries that were showing signs of having fully recovered from the impact of the pandemic in 2020. These indicators of contraction are also borne out by the reported shop closures.

While some businesses entered administration, others reduced their total number of outlets to scale back costs and more closely target core markets. These actions are the corporate response to the current risks in the economy. Fewer outlets reduce the volume of demand being placed on difficult supply chains, as well as reducing rental and, unfortunately, staffing costs.

The longer-term economic consequences of COVID and shifting consumption patterns were also directly felt by a number of the closures. Clever-Company opened in 2020 to sell inflatable hot tubs and captured a market that was spending more time at home. But by 2022, the market and cash for inflatable hot tubs had disappeared. A similar story can be told for the motor trade disrupter, Carzam.

A further trend that indicates a tough economic climate are the challenges experienced by a wide range of health and wellbeing companies including, Tree of Life, Stanton Bikes and TheVeganKind, plus clothing/lifestyle retailers such as, Gieves & Hawkes, Steptronic Footwear, T.M. Lewin and Made.com. Some closed entirely, but others were bought by larger retail groups such as Frasers Group and Next. The messages to be read into these actions for 2023. A continuing contraction of shops on the high street, less choice online and a growing concentration of familiar brands among an increasingly smaller number of ultimate owners.