In 2022, more high street businesses permanently shuttered their doors than at any other time in the previous five years, displacing roughly 150,000 employees.
Close to 50 shops shut down every day in 2022, more than at any other point for at least five years. 17,145 stores closed last year, a staggering increase of over 50% from the 11,449 stores that closed in 2021 during a brutal year for retail.
Jobs disappeared when stores closed. Online retailers contributed to the loss of more than 151,000 retail jobs in the UK last year, a rise of more than 45,000 from the year 2021.
How many shops shut every day in 2022?
A total of 47 shops per day closed with an overall closure rate of 17,145 in the year of 2022, according to the group’s assessment, while more than 11,600 were shut down because a larger chain needed to reduce expenses.
Professor Joshua Bamfield, the head of the Centre for Retail Research, stated: “As retailers continue to rapidly lower their cost base, rationalisation now looks to be the key driver for closures rather than corporate failure.”
Although he acknowledged that some “big hitters” would fail, he predicted that the trend will most likely continue this year.
The researchers discovered that the number of stores closing as a result of larger merchants going out of business (those with 10 or more locations) had decreased by 56%.
Black Friday and Christmas failed to deliver
The so-called golden quarter, which is the three months leading up to Christmas and the busiest period in the retail calendar, failed to provide a festive boost for stores, according to a separate report by retail restructuring experts KPMG and Ipsos Retail Think Tank. Savvy consumers who used Black Friday to bring Christmas gift purchases forward and grocery sales failing to hit the higher volume levels associated with Christmas time were the main causes (RTT).
Black Friday had a negative impact on some merchants’ already thin profit margins as they tried to get rid of surplus inventory or increase market share in the face of fierce competition.
The RTT reports that the UK retail sector’s health index dropped by two further points to 71 in the three months leading up to the end of December, marking the lowest level of Christmas shopping since 2011.
“Retail health continued to slip during the key golden quarter as increasing inflation, growing expenses, and flattened sales all took their toll on the health of the sector,” said Paul Martin, UK Head of Retail at KPMG. “Despite consumers deciding to safeguard their Christmases this year.
For many merchants, the holiday season was lacklustre, especially in the food industry, which accounts for more than half of all retail sales and where high inflation hasn’t caused the usual increase in grocery volume. As consumers tighten their belts, margins have come under increasing pressure.
For some retailers, like those selling expensive items, this pressure has been unavoidable. However, others with excess inventory have been forced to start promotions early, and some are choosing to forgo margin in order to gain market share. While there is still a chance for worse to come, the state of retail is slowly declining.
Next six months is critical for retail
According to an organisation that represents UK retailers, the next six months will be particularly difficult for stores across as consumers attempt to withstand rising prices by making fewer purchases.
According to the BRC, sales will only grow by 2.3% at most in the first half of the year before picking up as inflation slows and consumer confidence rises, with growth of 3.6–4.7% in the second half of 2023.
According to Kris Hamer of BRC, “Households and retailers will certainly face difficulties in the first half of the year. Although sales may appear to be increasing due to ongoing inflation as consumers continue to control their spending, we anticipate dropping volumes.
The Government’s Energy Bill Relief Scheme is set to cease in March, and energy costs are predicted to increase by £7.5 billion as a result. As a result, prices are projected to continue to rise.
There is reason for hope for the second half of 2023, when we anticipate lower inflation and rising consumer confidence to boost sales growth and corresponding volumes.
Rent free periods are need says Altus Group
The real estate adviser Altus Group said that retailers and landlords would have to pay close to £1.1bn from April 1 to cover the business rates on empty sites. These are sites that have been empty for three months.
“Rate-free periods need to be quickly extended to reflect the time that it actually takes to re-let vacated homes,” said Robert Hayton, UK president of Altus Group.
“The problems the retail industry is currently experiencing, which are being caused by the war in Ukraine, suggest that vacant rates are ready for modernisation.
Read more: Insolvency help for retail businesses
50 shops closed in the UK each day in 2022
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.