Retail administrations and insolvencies had “plagued” the high street this year and the recent increase in retail collapses and store closures “cannot be ignored”, the industry has warned.
Jo Windsor, a restructuring and insolvency partner at Linklaters, the law firm, told The Times that retail administrations and insolvencies had “plagued” the high street this year, with retailers “dependent on discretionary spending, who are vulnerable to lower-cost competitors or who have insufficient working capital” mostly affected.
He warned that the cost of living crisis, high interest rates, high energy prices, increased employment costs and inflationary pressures would “pose further challenges”. Those he identified as being most at risk included high street retailers with “too many or poorly located stores and those with no significant online presence”.
Three thousand more retail stores closed in 2023 than in 2022, according to figures released last month by the Local Data Company. There were 14,081 store closures across all retail sectors, a significant increase on 2022’s figure of 11,530. There were on average 39 store closures every day, largely owing to the collapse of Wilko, the DIY and homewares chain that closed 400 shops.
Andrew Goodacre, chief executive of the British Independent Retailers Association, said the figures showed “further evidence of how difficult it is for retailers on the high streets in the UK. Our own recent survey also showed more than 50 per cent of [independent retailers] were concerned about 2024.”
Tom Ironside, director of business and regulation at the British Retail Consortium, said business rates “remain the biggest threat to the vitality of our high streets”.
Lucy Stainton, commercial director at the Local Data Company, a retail insights provider, said that while the closures “can’t be ignored, the fact this sits alongside increased levels of new store openings seems to indicate operators are continuing to restructure and repurpose their portfolios rather than a terminal market decline.
“As we look forward across 2024, we expect to see such high levels of churn temper, as many large operators come towards the end of any material rationalisation programmes, as well as greater economic certainty in some aspects, given a level of recovery in energy prices and inflation.”
