Store Openings and Closures H1 2024

Overall trends stabilising, but the devil is in the detail

While net closures are up slightly this half-year, the trend remains broadly stable with a similar number of net closures for each of the last three years. It appears some much needed stability may have returned after the pandemic volatility, but churn has increased, and once we delve into the details, it’s not a stable picture for all.

In the first six months of this year, a total of 6,945 shops belonging to multiples and chains (those with five or more outlets) exited Great Britain’s high streets, shopping centres and retail parks, equivalent to 38 shops per day. This marks a slight rise in closures when compared to the first six months of 2023, when 36 shops closed each day.

Openings also grew slightly, up from 24 to 25 per day. While the uplift in both openings and closures means slightly more churn, it does signal some level of stability for shop vacancies when we look back over the last three years; the net decline has stayed around the 1% mark every six months, suggesting a slow but steady decline in physical outlets as consumers increasingly undertake more transactions online, whether that’s shopping or other service transactions like banking.

In fact, retail chain store closures almost exactly mirror the decline of in-store shopping and the corresponding rise of online retail sales, something we noted in the 2023 full year data. Online retail penetration has increased further in H1 2024 - partly explained by the unseasonably wet weather - and returned to the long-run pre-pandemic growth trend. In fact, non-food online retail penetration is at its highest since October 2021, the tail end of the pandemic.

However, with overall net closures remaining relatively stable at between 11 and 12 outlets per day for the last three years, there are reasons for operators to be optimistic. For many operators, this level of predictability gives time to reset and focus on consumer needs and behaviour. When we look more closely at the data, it’s clear where the pressure points are.

Carefully curated retail parks and shopping centres win customers

Across the country, net store closure rates have been broadly similar from one region to another: as we identified this time last year, no UK region has been more than 0.3% different from the national average for the third year running. Therefore no one region is dragging down the national average or being ‘left behind’ in the evolution of physical high streets. Instead, there has been an emergence of cycles within each region. Areas that saw higher-than-average closures in previous years are now starting to level off, and vice versa, suggesting that each region is simply adjusting at its own pace to macro nationwide trends. For example, the South East had two years of comparably slower decline, whereas this half-year it has seen a sharper exit of stores, falling in line with other regions over a three year period.

While there’s little difference between regions, that’s not to say closures are uniform within regions. Operators are continuing to move out of high streets in favour of retail parks. And carefully curated shopping centres are pivoting to different uses, such as leisure, entertainment and hospitality, in order to fill the voids left by pandemic-era closures.

Footfall is a significant part of the explanation for this trend. Currently 15-20% lower than before the pandemic, the decline in numbers of shoppers has dampened sales and the profitability of some stores and hospitality operators. High streets in particular have continued to suffer, with a decline in footfall in every month of 2024 so far, except for March, explained by the earlier Easter holidays. They have not been helped by both a higher-than-national-average net closure rate of 1.5% in the first six months of the year, and have been more vulnerable to the unseasonably wet weather.

Shopping centres have also seen a fall in numbers of customers. However, for the first time since the pandemic, they have seen slightly fewer net closures (1.0%) than the national average (1.1%). Compared with high streets, shopping centres typically benefit from a single, unified landlord, which means they can act more quickly - and more strategically - to the challenge of vacant properties. Astute landlords are able to curate a coherent destination experience that does not necessarily rely on like-for-like replacement of one retailer with another, but instead pivot to hospitality and leisure or alternative uses to attract different types of footfall.

Retail parks are the only location-type bucking the declining trend, and showing an improvement in footfall in each of the last twelve months except for April, due to the earlier timing of Easter. This is reflected in chain outlet numbers, which were actually in growth (by 0.4%) on retail parks in the first half of 2024. With limited public transport in much of the country and increasing restrictions on driving and parking in many town centres, retail parks offer easier accessibility and plentiful free parking; they are also often anchored by the big supermarkets, making them a regular and necessary visit - and a consistent spending priority according to successive PwC Consumer Sentiment surveys. Retail parks have continued to develop their offer with additional leisure amenities, with a growth in hospitality venues and drive-throughs which we noted this time last year. And this increase in footfall and outlet numbers comes despite the impact of weaker recent demand for home and DIY stores during the cost-of-living crisis, which are typically stalwarts of the retail park.

Fastest growing categories are driven by openings in out-of-town locations

This half-year, only four outlet categories saw net openings of more than one per week, each of which reflects market growth opportunities specific to those categories.

Echoing our most recent consumer sentiment findings, grocery has been the most resilient category. The rise can be explained by the increase in convenience stores, with many large grocery chains opening smaller stores instead of larger, full-sized supermarkets, which were the third fastest growing outlet type this time last year. While large supermarket outlet numbers are still in positive territory, their rate of growth has declined as the major discount supermarkets chains have slowed down their store opening ambitions.

Instead, value retailers have been represented by the major general merchandise chains, which have taken advantage of vacant property - and available market share - to open more stores following the exit of one of their key competitors in 2023.

There’s also been an acceleration in the number of openings of chain coffee shops and cafes, both capitalising on the move to out-of-town locations such as drive-throughs, on retail parks and inside supermarkets.

Half of net closures are concentrated in three categories

Just three categories account for half of all net closures: chemists, chain pubs and banks. What do they all have in common? Their predominant location: the high street.

It’s perhaps unsurprising that these categories are seeing so many closures. Banks in particular are facing a structural decline in branch numbers, with online banking increasingly the norm, reducing the need for many customers to visit in person. In fact, as we highlighted previously, more than half of all bank outlets have closed since we started measuring chain openings in 2015. Estate agents and employment agencies are also among the ten fastest declining categories in the first half of 2024, both facing similar structural changes to their respective industries, driven by changing consumer habits and the move to online - similar to the trends we saw in the past with categories such as travel agents and betting shops.

Other categories posting higher net closures can be largely explained due to one-off exits and restructuring by top players in their industry. For example, one of the country’s largest chemist chains went into liquidation earlier in 2024; while another chain has announced that it is closing several hundred smaller and duplicated outlets in favour of fewer, larger destination stores. That’s not to say that chemists are moving away from smaller high streets altogether, with independents taking up some of these vacated sites.

Despite the good news for coffee shops and cafes, it has not all been good news for hospitality more widely. The first half of 2024 saw more than two chain pubs close every day, predominantly driven by a number of larger, less well capitalised operators exiting weaker sites. Pubs have been particularly exposed to energy and labour cost inflation, while at the same time having to contend with lower consumer demand as a result of both the cost-of-living crisis as well as the trend of younger customers drinking less and older customers drinking at home.

Chain restaurants have also seen an increase in net closures, although at half the rate of their worst performance during the pandemic in the first part of 2020. Restaurants have been affected by many of the same cost and demand pressures seen by pubs, albeit openings by more successful chains have offset closures by weaker players; in fact some cuisines, such as East Asian, have seen net growth in chain outlets to date this year.

Interestingly, fashion has seen a significant improvement in closure rates compared to H1 2023. The net closure rate has slowed by nearly two-thirds, despite a number of high-profile fashion retail businesses falling into administration and announcing closures. That said, fashion retail sales have been particularly hard hit by the unseasonal weather in the first part of the year, declining by 11 months in a row in volume terms, and more chains have already announced closures in H2 2024, so this will be an interesting category to watch as we head into the golden quarter.

The most stable position in six years?

Despite an increase in net closures, less than three in five of PwC’s 100 outlet categories are in decline, signalling the most stable position in six years. The number of categories in growth has jumped to almost 30%, nearly twice as high as during the pandemic period. Continuing this growth will require operators to respond to consumer behaviour; understanding where they want to shop and the experiences they are looking for.

While the overall picture is of decline – holding steady at around one percent net closures every six months – it’s arguably flat over a three year period. For some categories, results have been heavily skewed by major player exits, with announcements of mass closures or administrations. We can expect more of this to come, impacting results for H2.

It’s clear that pockets of opportunity exist. Retail parks are in net growth for the second year running, and there’s a notable recovery in shopping centre openings. We’ve also seen fewer closures in historically weaker categories like fashion, charity shops and betting shops.

However, mass closures of the types of outlet typically found on high streets and town centres - chemists, pubs and banks - means a loss of key footfall drivers. As a result, there is arguably even less of a reason for shoppers to visit the hardest hit high streets, and a risk of a vicious cycle of decline without intervention by operators, landlords and local government.

While the big shocks may have gone, operators are right to feel cautious ahead of the golden quarter. In the longer term, it’s clear that chain openings will not be enough to offset closures, and the trend of slow decline is unlikely to reverse in the medium term. The question for policymakers is: what happens to all those vacant sites? What can high streets learn from the success of retail parks and turnaround of shopping centres? And how can these spaces be regenerated to ensure town centres continue to be a place where people want to visit in the face of these wider challenges?