Restaurant, catering and entertainment chains saw a net loss of 340 businesses in the first half of 2018, as the high street experienced a record fall in store numbers.
The growth of online shopping, in-home leisure activities, heightened restructuring activity and the digitalisation of services saw 2,692 stores disappear from Britain’s top 500 high streets – 14 a day – with only 1,569 moving in to take their place, according to research compiled for PwC.
The accountancy firm has warned that the “testing” retail and leisure climate is looking unlikely to abate.
Lisa Hooker, consumer markets leader at PwC, said: “The continued rate of store closures reflects the new reality that many of us prefer to shop online and increasingly eat, drink and entertain at home. The high street is adapting to an overcapacity in retail and leisure space resulting from these channel shifts.
“Openings simply aren’t replacing the closures at a fast enough rate. Specifically, the openings across ‘experiential’ chains, such as ice-cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories.
“Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.
“The British high street is in urgent need of new ways of thinking and new forms of retail. Encouraging this should be a priority, and it remains to be seen if recent packages of support for the high street and reductions in business rates for smaller retailers will be sufficient to stimulate this.”
The first half of 2018 saw several restaurant groups including Jamie’s Italian and Byron pursuing CVAs, which saw them slim down their portfolios.
Zelf Hussain, retail restructuring partner at PwC, added: “The number of distressed businesses in 2018 has led to a spike in company voluntary arrangements. We believe that CVAs can be helpful restructuring tools, but alone are insufficient. Our own research of more than 101,710 companies listed on Company House shows that of the 65 retailers entering into a CVA between 1987 and 2017 more than half (51%) failed, leading to another insolvency process.”
Greater London saw the largest number of net closures, with leisure making up nearly half (128 units). Wales was the best performing region.