Shop closures in UK hit highest total for five years

The pace of store closures in the UK accelerated in 2022 as Covid-era support measures were withdrawn, with rationalisation rather than insolvency the main reason for shops shutting, according to a study.

The Centre for Retail Research found that more than 17,000 shops closed last year, equivalent to 47 a day, the highest total in five years. The figures are gross and do not take into account new store openings.

The CRR said 11,636 closures were due to rationalisation programmes by large retailers or independents simply shutting up shop for good, while 5,509 were due to some form of insolvency proceedings.

Professor Joshua Bamfield, director of the CRR, said rationalisation seemed to be “the main driver for closures as retailers continue to reduce their cost base at pace”. He expected the trend to continue in 2023.

The CRR said store closures due to corporate collapses, such as those of Debenhams and Arcadia, both of which were wound up during 2021, fell 56 per cent last year.

Major retail insolvencies in 2022 included convenience retailer McColl’s and lifestyle group Joules. Both companies were rescued but 19 Joules stores closed as part of the administration process and McColl’s new owners have since announced plans to close more than 100 outlets.

Retailers received extensive government support during the coronavirus pandemic, including the furlough scheme that allowed them to retain staff, the ability to delay value added tax payments and exemptions from business rates.

However, this support tailed off throughout the year, with business rates support now subject to a cap that drastically reduces its value to larger retailers.

Like other sectors of the economy, retailers have been bit by a rise in labour costs — the UK’s statutory minimum wage rose more than 6 per cent to £9.50 per hour in April — and the sharp jump in energy prices, triggered by Russia weaponising gas supplies as part of its war in Ukraine.

The wider recruitment crisis also hit retailers, with the ONS estimating there were 91,000 vacancies in the sector in the three months to November.

Almost two-thirds of the closures cited by the CRR were among independent operators — defined as those with fewer than 10 stores. However, other studies of the retail market indicate that in many sectors closures have been largely offset by new independent ventures starting up.

The Local Data Company said in September that independent operators opened a net 1,335 units in the first half of 2022, although this figure includes hospitality businesses and services, such as barbers and tattoo parlours, as well as retail.

The number of units occupied by independent non-food retailers fell just 0.1 per cent in the first half, it found, while independent convenience store numbers rose 1.6 per cent.

CRR data found that the store closures were accompanied by the loss of more than 150,000 jobs, a rise of 43 per cent from the previous year, though that included jobs lost at online-only retailers.