LDC: slowdown in shop openings in first half

Growth in store openings slowed in in the first half of 2016, according to new research from the Local Data Company (LDC).

Closures exceeded openings by 1,997 in the period from January to the end of June.

In comparison, in the second half of 2015, openings were more numerous than closures by 335 in Great Britain.

The turnaround was the result of openings falling by 15%, while closures dropped just 5%, as 22,801 shops closed in the first half, weighed against the 20,804 that opened.

Demolitions and re-uses of retail premises exceeded the supply of new buildings, so the percentage of empty units (the vacancy rate) actually fell until right at the end of the half – at which point it just began to tick upwards.

LDC director Matthew Hopkinson commented: “Growth slackened significantly in the half year leading up to the referendum at the end of June, taking the steam out of the gentle improvement in vacancy that has improved by 2.3% since 2011.”

He continued: “Since the end of June we have seen the vacancy rate in leisure outlets inch upwards. Whether this will be just a twitch in the statistics or the beginning of a long term reversal will become clear over the coming months. For example, the 23% net growth in restaurants since 2010 is unlikely to continue. Business, government and the media are all sniffing the air and scanning the horizon for any piece of news that might tell us what happens next.

“Of note is the structural change in the number of retail units by location type in the last five years, with a net loss of over 5,000 units – but with out of town retail parks growing by nearly 1,300 new units. Not only how we ‘shop’ but where we shop has changed dramatically.”

He added: “Increased costs for retailers, coupled with fierce competition and over-supply of shops, is likely to see increased levels of distress and failure among retailers – with survival of the fittest being the order of the day.”

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