West Midlands store closure rates slow in 2022

Net store closures in the Midlands are at their lowest rate since 2018, according to new data from PwC and the Local Data Company. The twice yearly research tracks over 200,000 outlets in over 3,500 locations to gain a picture of the changing landscape of high streets, retail parks, shopping centres and stand alone outlets.

The region saw a net fall of -2.3.% in 2022, improving from -5.4% in 2021, with 1,024 shutting shop in the region, whilst 596 new stores opened in the same period, creating a net closure rate of 428. The rate of closures has improved from 2021 when there were 641 openings and 1,676 closures and a net change of 1,035.

The West Midlands was the part of the country most impacted by store closures in 2022, following Greater London and with Yorkshire and Humber coming in third. In contrast, the East Midlands saw a net fall of -1.4%, the third lowest in the country.

The West Midlands saw some parts of the high street thriving with takeaways, convenience stores, DIY and pet stores bouncing back, helped by pandemic trends. Retail parks across GB remain the most resilient outlet type with a small -0.3% closure rate with shopping centres (-1.6%) also recovering at a promising rate. High Streets were slightly lower at -2.6% but all outlet types saw a significant improvement in their net closure rates. 

Sarah Phillips, PwC Partner and Consumer Markets Leader for the Midlands, comments:

“In the last few years, the region has seen some major retailers exit the high street. However, it’s not all doom and gloom as we’re seeing some green shoots appear, as the rate of store openings has doubled in line with store closures.

“It’s unfortunate that business failures are part of a working economy, due to factors like business model shifts, changes in technology and consumer habits. We’ve been through a long period of generally lower levels of closures, predominantly due to Government support and low interest rates. However, history shows us that in challenging times, we also see an increase in innovation and opportunities for new stores and hospitality venues to thrive, such as how restaurants pivoted during the pandemic to meal-kits and at home deliveries.  

“Furthermore, we are seeing innovative store openings as retailers seek to provide experiences to consumers and better utilise space, mixing fashion with lifestyle, beauty and hospitality offerings whilst using the latest technology to entice younger shoppers. For example, the recent plans unveiled for the ex-John Lewis store in Grand Central include a restaurant, gym, food market, rooftop garden and co-working spaces, modernising away from a traditional department store.  

“There are challenges ahead with a potential recession and the cost of living crisis continuing, however we have seen how quickly the tide can change and there is positive growth for retail across GB, as more people return to work and offices, boosting the high street.”

Store Openings and Closures across GB

The latest research shows the lowest number of closures across GB since the research began, marking a positive turn for retail post-pandemic. The 2022 full-year results show a total of 11,530 chain outlets (those businesses with five or more outlets) exited GB high streets, shopping centres and retail parks - a significant drop from the 2021 figure of 17,219 outlets. Equivalent to 32 closures per day, the figure remains significantly lower than the almost 50 per day that were closing during the pandemic period. New store openings have improved with 7,903 store openings (equivalent to 22 per day) this year, the highest since 2019. Net closures now sit at -10 per day, marking the lowest rate since 2016 - and just 1.7% of the total number of chain outlets, compared with the 5.7% that closed in 2021. 

Retail parks remain the most resilient outlet type with a small -0.3% closure rate, and shopping centres (-1.6%) are also recovering at a promising rate. High streets were slightly lower at -2.6% but all outlet types saw a significant improvement in their net closure rates. 

The variation across the regions has also narrowed - a trend first noticed in the first six months of 2022. That trend has continued to the extent that regional variations have nearly disappeared. This year has seen the spread of results (GB average -1.7%) have less than one percentage point between the worst performing (West Midlands at -2.3%) and the best (South East -1.3%). This is a positive turnaround for London, which was particularly hard hit by the pandemic lockdowns. It was -5.8% in both 2020 and 2021, significantly worse than any other region, but just -2.2% in 2022.

Lucy Stainton, Commercial Director for the Local Data Company who collect the research talks about the trends in the 2022 data: 

“CVA and administration activity dropped in 2022, helping to drastically reduce the total number of closures across the market.  Alongside the benefits of the first full year free from restrictions, the return of office workers and tourism boosted footfall, supporting new store openings.

Shopping centres bounced back in 2022 after a turbulent period as acquisitive brands opened units across destination centres. Retail park performance also improved as easy access, free parking and the convenience of these locations attracted shoppers. 

Stronger than anticipated golden quarter performance provided a solid base from which to start 2023, as postal strikes drove shoppers back to bricks and mortar for their Christmas shopping. We expect 2023 to remain positive with funding available for stores to protect against high energy prices, the continuation of workers returning to offices and a revision to business rates providing much needed support to navigate current market headwinds.”

Eight of the 100 outlet categories tracked by the Local Data Company saw net growth in double digits. Of those, leisure outlets accounted for half. 

Takeaway stores continue to top the league table for new openings, with demand for both food on the go and  home delivery continuing post pandemic. Many are franchise operators, as are the other success story: convenience stores. Nimble, with significant local knowledge and capital-light, these local entrepreneurs can move quickly and service gaps in the market backed by strong brands and helped by lower rents as other operators have retreated post-pandemic. Other categories, such as DIY and pets are bouncing back, helped by pandemic trends.