It's official - UK really is seeing fewer store openings, vacancies rise

There was a dramatic fall in the number of UK shop openings in the second quarter of 2017, according to a new report from the Local Data Company.

The changing role of physical retailing, coupled with rising costs and Brexit uncertainty are causing retailers to think twice before opening new stores.

According to the research firm, the number of shop openings reduced by 84% year-on-year, resulting in a net loss of -207 shops compared to an increase of +1,284 shops in the second quarter of 2016. The net difference between these two periods is the biggest fall between any two consecutive quarters in the past five years.

The result underpins a trend that has been gathering momentum for some time, in fact the number of openings has reduced by 25% between the 2012 quarterly average and the second quarter of 2017.

The decline in shop openings meant the shop vacancy rate increased, with both May and June experiencing rises to 12.2%. However, this is still significantly below the 2012 peak of 14.6%.

“Whilst the numbers are currently relatively small to the total number of shops, the vacancy rate in Q2 started to rise and is likely to continue to do so if the current uncertainty continues,” said Matthew Hopkinson of LDC.

“The role of physical retailing continues to evolve and the place that a shop has in the overall buying cycle varies from brand to brand and sector to sector. Stores continue to perform a vital role in the purchase cycle and consumer journey but the key questions remain around how many shops you need, what kind of format and in which locations.

“With rising costs everywhere for retailers, margins are being squeezed and therefore understanding these micro to macro location trends is fundamental for retailer success.”

Hopkinson said shorter lease lengths and more proactive management by landlords are likely to increase the number of openings and closures and add more fluidity to the high street going forward.

The report also reveals that retail parks have seen more net openings than high streets or shopping centres over the past five years, but they are home to just 2.5% of all stores.

High streets are still important with them still hosting 50.5% of all UK retail units.

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