Shop closures soar in UK
Around 12,000 independent shops and 7,000 branches of major high street chains have closed so far this year, according to a new report.
The Local Data Company (LDC) says average town centre vacancy rates in England and Wales have risen from just over 4% in mid-2008 to nearly 12% at the end of June this year.
The Midlands and northern England have been hardest hit. Derby has fared worst, with a vacancy rate of 21.8%, followed by Blackpool, Liverpool, Wolverhampton and Leeds. In central London 12.8% of shops are currently empty, while Nottingham has done well to weather the recession with a vacancy rate of just 2.5%.
"Just as thriving town centres demonstrate vitality, empty shops lay bare weakness and failure," states the report.
"Empty shops have a corrosive effect upon the confidence of any area - and their numbers are growing."
The demise of Woolworths is a particularly poignant sign in virtually every town centre in the country. As a result of its closure, 800 prime retail units became vacant and 70% remain empty.
The LDC reported a 50% drop in new store openings in the past 18 months and in many areas an increase in churn rate - the frequency at which a shop closes and changes hands to open under a new guise.
Again the north and Midlands took the brunt, with Wakefield in West Yorkshire showing a 716% increase in churn rate, followed by Wolverhampton seeing a rise of 387%.
"In a recession, churn tends to be driven more by a failure to trade and this time around has not been an exception," the LDC report said.
Light at the end of the tunnel
The study isn’t all doom and gloom however, with the LDC reporting an increase in retail sales volume of 2.9% throughout June 2008, the largest annual gain since December.
"This was way above expectations and could set the scene for a stronger than expected second half of the year. However, this has to be balanced against continued rises in unemployment and therefore less spending power overall."
The research comes as another study reports that consumer confidence held steady in July, as a small deterioration in Britons' expectations for their own finances was offset by a more upbeat view of the economy as a whole.
The GfK/NOP consumer confidence index, conducted on behalf of the European Commission, was unchanged at -25 in July, 14 points higher than this time last year, but below the consensus forecast of -23.
In a financial context, churn refers to the frequency at which a share portfolio or investment fund sells the securities in the portfolio to realise cash in order to buy more securities. It’s also a way unethical brokerage firms “churn” clients’ accounts by trading securities very actively in order to increase brokerage commissions rather than customer profits, as brokers’ income is directly related to the volume of trading they undertake on customers’ behalf.