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Store closures surge tenfold in 2012 driven by retail administrations

An unprecedented level of large-scale retail collapses pushed the number of store closures among multiple retailers up tenfold in 2012.

Last year 1,779 stores from multiple retailers were shuttered, compared to just 174 shops in 2011.

In 2012 an average of 20 stores closed down every day. That number has surged to 28 per day in the three months to the end of February, driven by the administrations of retail giants Jessops, Blockbuster and HMV.

Matthew Hopkinson, director of The Local Data Company, which compiled the report along with PwC, said he expects the 2012 trend to “continue and indeed accelerate in 2013 as more leases come up for renewal along with the ever increasing demands from consumers for space that delivers an experience good enough to pull them away from their technology devices”.

Store numbers in the UK declined by 2.7% last year from a 0.25% fall in 2011, as retailers including Peacocks, Clinton Cards, Game, Comet, JJB, La Senza and Blacks all collapsed into administration, shuttering hundreds of stores in the process.

Hopkinson added: “The end of 2012 and the beginning of 2013 has seen the most dramatic period on record as companies controlling more than 1,400 shops went into administration.”

The retailers that bucked the trend last year were those that catered to the cash-strapped consumer, including pound stores, pawnbrokers, charity shops, cheque cashing or payday loans premises, betting shops, supermarkets and cafes.

PwC chief retail adviser Christine Cross said the figures were “more disappointing” than expected and added that retailers need a “very different operating model” to those in the past.

“While rates remain high, there is still a need for retailers to address cyclical cost increases and, even more, structural changes in ways of doing business,” said Cross. “Today’s customer does not differentiate between where they heard about, researched, saw, purchased or returned a product. They expect to be able to effect every part of the shopping transaction from any channel. This is the age of the total retail experience and it demands a very different operating model to be successful.”

PwC insolvency partner and retail specialist Mike Jervis said retailers that failed last year had over burdensome property estates and not enough focus on multichannel. 

The Southeast was the worst hit region in terms of store closures. It recorded a net loss of 376 stores in the year against five in 2011. The Northeast was the region that fared the best last year with a net loss of 51 stores.

Readers' comments (5)

  • Not sure HMV can be included in the last 3 months figures. Since administration, only 4 HMV stores have actually closed, and those are the 4 airside shops (Terminals 1, 3, 4 and 5) at Heathrow,

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  • "...Mike Jervis said retailers that failed last year had over burdensome property estates and not enough focus on multichannel"

    I think this is good point; over-extended retailers out of touch with modern retailing are always going to struggle.

    But I think all sorts of factors contribute to whether a store in the estate is a burden to the whole group and ever-higher occupancy costs seem to play a significant a role in making property estates “burdensome” over time.

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  • It's all very well stating that retailers should follow multi-channel. Of course they now need the cash to make a serious investment in the web. I wonder how many simply don't have the resource and are awaiting the next wobble to send them over the edge.

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  • All retailers must understand the integrated and multi-channel demands of the modern consumer if they want to compete. For smaller retailers it doesnt have to be costly, only realistically scaled down!

    The question is do they have the right talent and understanding to drive their business forward?

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  • The feudal UK rental ratchet is responsible for most of this wreckage. No other country in the world allows this ruinous commercial property lease law.

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