Record Insolvencies on British High Street

A study by professional service company PwC found there was a ten-fold increase in the number of high street shops shutting down in 2012 compared to 2011. The data came from a survey of 500 town centres all over Great Britain.

Notable closures in last year were former High street giants Jessops and Comet. Altogether a total of 7,337 shops closed and only 5585 new shops were opened.

In greater London, 1,281 new shops closed only to be replaced by 1880 shops resulting on a net closure of 101 shops.  The same patter could be seen all over the UK. In Scotland 77 stores were closed in one year and in Wales 65 shops were lost.  On average, 20 shops were shut everyday last year.  This meant 2012 was record year for high street insolvencies.

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Clothes shops, computer game retailers and stationary shops also disappeared from the high street. The trend seemed for these shops to be replaced by cheap pound shops, bookmakers and payday loan outlets.

Health food shops and recruitment agencies also topped the list of high street losers. There we nearly 25% and 16% less of each type of store compared to the previous year.

Psychologist Cary Cooper of the University of Lancaster commented, “Seeing empty shops, seeing the kinds of shops that are now on the High Street, doesn’t encourage communities or families”. Professor Cooper argued that the high street had psychological and social value to Britons and that the changes seen were a threat to community cohesion.

The research by PwC also found other retailers who were still solvent opted to close retail units in favour of distributing products from internet stores.

This seems to be a good move for those still in business as “The failed chains generally shared two problems – too many stores and too little multi-channel activity”, said Mike Jervis, insolvency partner and retail specialist at PwC.

Another trend found in the data, was that local convenience stores were being frequently replaced by supermarket heavy weights like Tesco who have expanded by opening mini-marts on the high street.

The downward trend is expected to continue as people have less money and continue to spend less.

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Article provided by Sai Muchenje