Retail closures rise tenfold in 2012

    Figures published today by PricewaterhouseCoopers show the rapid rise in retail closures during 2012, spurred in part by the headline-grabbing collapses of several major chains. Certain of the main suffering retail categories – such as card shops, computer games and sports goods – can be linked with brands like Clintons Cards, Game andRead More

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Figures published today by PricewaterhouseCoopers show the rapid rise in retail closures during 2012, spurred in part by the headline-grabbing collapses of several major chains.

Certain of the main suffering retail categories – such as card shops, computer games and sports goods – can be linked with brands like Clintons Cards, Game and JJB Sports.

Elsewhere, there have also been multiple shop closures in clothing, health foods, jewellers’, banks, recruitment agencies and travel agents.

In contrast, however, disciplines relating directly to the economic turbulence – payday loan shops, pawnbrokers, charity shops and pound shops – have all increased in number, along with bookmakers, coffee shops and supermarkets.

The latter of these is likely to consist mainly of smaller convenience stores, rather than an increase in megastores, as several of the main supermarket chains look to capitalise on the growth in sales at smaller outlets.

East Midlands Closures

Overall in 2012, 1,779 retail closures were recorded by PwC, up from just 174 closures the year before – and that is a net figure, so is offset partially by any new openings.

Within the East Midlands, fortunes swung significantly, as in 2011 the net change was actually positive, with four more retail outlets opening than the number that closed.

In 2012, 419 new stores opened, but 584 closed, leading to a net balance of -165 for the East Midlands.

This is a larger negative shift than several other areas of the country, including Greater London, the north-east, Scotland, Wales, and Yorkshire and the Humber.

Christine Cross, chief retail adviser to PwC, says: “What is surprising is the speed at which stores have been picked up by value and grocery retailers in particular; good businesses with good operating models and good people don’t fail.”

Reducing Risk

The figures are a clear indication that the UK economy – and the retail sector in particular – is not out of the woods yet, and should raise concerns for anyone operating in that supply chain.

If your client base is operating largely within one of the worst-affected segments, it might be worth carrying out new credit checks even on existing customers, to make sure their credit status has not changed.

With new customers, meanwhile, a cautionary approach to extending new credit should allow you to minimise your risk of non-payment, with credit limits set on a client-by-client basis through the use of background credit checks.

 

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