Scottish store closures rise to one per day

This compared to 140 closures in 2014 and 2015 and there were 116 store openings over the period, an increase from 95 in 2015 but down from 133 in 2014.

Across the UK, the first six months of the year saw 2,656 business outlets closed on Britain’s high streets, a rate of 15 stores a day, a slight increase on the 14 stores a day reported to have closed in the first six months of 2015.

The number of new openings fell to 2,153 - the lowest level since 2011.

In Scotland, where only Falkirk saw growth, the fashion shops saw the highest number of openings across the country – but also the largest number of closures.

Other large numbers of closures came from banks and charity shops.

In terms of net openings, Satellite TV firms, health clubs and e-cigarette vendors led the way.

Lindsay Gardiner, regional chair for PwC in Scotland, said: “While the figure of 203 closures against 140 in previous years is higher and seems more dramatic, it averages out at just over one closure per day which has been the Scottish average for most years since 2012 – but that will be of little comfort to people who have lost their jobs and livelihoods because of this.

“While Falkirk may buck the trend – as has happened previously – it is still very tight for the local economy, making a case of cautious celebration for the area.

“As this data covers the first half of 2016, the full ramifications of the EU referendum vote are not realised but we have seen hints of challenges - like foreign exchange rates, Living Wage pressures and business rate increases - in certain parts of the Scottish retail sector as costs challenges begin to materialise.

“These can be managed provided revenue is maintained - so consumer spending will be crucial in the coming months.

“If we look ahead to Black Friday and Cyber Monday (25th and 28th November respectively), upcoming research shows that 27% of consumers intend to make purchases, spending on average £203 over the weekend.”

Bruce Cartwright, head of business recover services for PwC in Scotland, said: “In general, we are seeing far fewer closures due to outright insolvencies, but more due to lower key restructuring of store portfolios.”

Customer shopping in the lead up to and just after Christmas 2016 will obviously be crucial for retail businesses but there is another aspect to this that firms have to get under control – and that is returns.

“Many items purchased will end up sent back and this can be a huge issue as companies then buy in more stock to cover demand. Data suggests that companies over-order stock by 25 per cent to cover returns which is a huge overhead and not necessarily one that converts to profit by the time returns have been processed and are ready to be resold.

“So yes, it’s obvious to state that sales will be a huge issue, but control over returns and refunds will be equally important.”

For Aberdeen, Kevin Reynard, office senior partner for PwC in Aberdeen, said: “While there were more closures than openings, it is by one of the smallest percentages in the country, which may give existing retailers hope for the coming months. The last few years have not been the easiest for retailers in the North-east so this data should be welcomed.

“This is clearly just a half-year report but this time last year we had more store closures than we have this year, so hopefully a corner has been turned. We will have to wait and see because retail, like everything else in the North-east, is tied into the performance of the local economy.

“The one outstanding question is what impact the EU referendum result will have on retailing in the second half of the year.”

Addressing the situation in Glasgow, David Leslie, office senior partner for PwC in Glasgow said: “While fifty closures in the measured Glasgow area is cause for concern – second only to Edinburgh where 82 units closed – 32 units did open as retailers either merged branches or new operators moved into the city. Glasgow is far from being abandoned by shoppers or retailers.

“If you walk down Buchanan Street or Sauchiehall Street, it’s clear to see that Glasgwegians and Scots are still hitting the high street. Consumer confidence is still relatively high as we head into the festive period and the impact of the EU referendum is yet to hit home. The challenge ahead for retailers is making sure they optimise their ability to retain those customers past the festive period and maximise footfall for income.

“While Paisley lost two outlets, let us put that in perspective. Paisley is an area with a considerable number of retails outlets so this may be a balancing out. As we are in a period where many retailers are merging units, it’s entirely possible that while the number of units has lessened, customers still have the same number of shopping options – especially when you consider the number of larger outlets nearby and in Glasgow.”

For Dundee and Perth, Susie Simpson, partner and business lead for PwC in Dundee, said: “Between them, Dundee and Perth have 13 less retail outlets than they did at the start of the year and while other areas have been more significantly impacted, that will still give some pause for thought.

“On the upside, some retailers are still choosing to open and expand in the region, perhaps buoyed up by the regeneration of certain key areas including the Dundee waterfront where the passing shopper could not fail to be impressed by the speed of growth in the V&A building and train station development.

“It is the optimism sparked by these types of wider developments which can cement the demand for bricks and mortar retail outlets in addition to the move to digital offerings.

“The two big questions hanging over the data – and we won’t know the answer for a while – is what sort of Christmas the retailers will have, online and offline, and what impact the EU referendum result will have as it hasn’t really hit the pockets of shoppers yet.”

In Edinburgh and Leith, Mark Hoskyns-Abrahall, office senior partner for PwC in Edinburgh said: “Edinburgh has seen the largest number of openings during the first six months of the year – which should be welcomed – but also the largest number of closures. There’s 46 less retail units operating.

“While that is a high number and will give some cause for concern, it needs to be tempered with looking beyond the figures. Many of these closures have been down to companies merging branches and closing two units to move into a larger outlet.

“We must also remember that retail is continuing to be impacted by online as shopping there continues to evolve and what local companies need to ensure is that they have a strong, robust and safe offering online to ensure they do not miss out on sales.

“For Leith, the fact that there were zero new openings may give some worry but as with Edinburgh as a whole, it is worth considering the effect of store consolidation.

“Looking ahead, the recent commencement of the St James Quarter is a major step forward for retail in Edinburgh. PwC advised the developer on the Growth Accelerator funding model that is a key component of the overall financing package for this development which will bring a further 850,000 sq ft of high quality retail space to the city by 2020 along with enhancing Edinburgh’s offer of hotel, leisure and residential space.”