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20 retail stores closing every day 11 July 2011

The data also revealed that across multiple retailers in 300 town centres, clothes, shoe shops and jewellers have been amongst the hardest hit in 2011.

PwC’s own latest retailinsolvency statistics for the second quarter of 2011, released on July 8, also show that there were 375 retail insolvencies this quarter - nine per cent more than the same time last year.

The report from the Local Data Company (LDC), a research business specialising in retail, showed that supermarkets, convenience stores and cafes bucked the trend by showing growth in the first half of 2011.

PwC’s own research indicates that, since the start of the recession, financially troubled retailers have closed, or plan to close, on average half their store portfolios as the high street comes under pressure.

The accountancy firm examined the announcements of eight high-profile failed or struggling high street retailers and found that on average 51 per cent of the total store portfolio have or could be closed.

Mike Jervis, PwC insolvency partner and retail specialist, said: “Retailers will continue to struggle for the next six months and we will see high levels of financial distress among certain types of retailers such as clothes shops.

“The combination of rising inflation and dented consumer confidence has led to people increasingly trying to find the best deal online. This has made life difficult for store-dependent high street retailers who have seen a drop in sales and reduced footfall.”
Jervis explained that retailers cannot afford to bury their heads in the sand, and must think about surgery before the problem becomes terminal.

“They need to engage with their stakeholders early, especially banks, landlords, credit insurers and their staff.”

Previous PwC research has indicated that the picture has been made gloomier for high street retailers by the shift to online shopping.

Its survey of more than 1,000 consumers revealed that internet shopping has moved from being used occasionally to becoming routine, with 14 per cent of people now buying on the web more than once a week, compared to only four per cent in 2007.

Nearly one in five respondents said they are spending more than half of their disposable income online.

Mark Hudson, retail and consumer leader at PwC, said: “The next challenge is going to be planning sales and securing stock for Christmas - there are going to be some tough negotiations in the coming months.”

Matthew Hopkinson, director of the Local Data Company, said that retailers now require fewer stores in fewer locations but with larger floorplates.

He added: “The negative trend seen here is, however, offset by the supermarkets and their move into convenience formats, along with the new opportunities presented to charity shops, pawnbrokers and betting shops.”

The Local Data Company’s analysis shows that Rochdale and Lancaster were the hardest hit towns in the north west. In the north west, 17 womenswear and childrenswear outlets closed and 12 bars, clubs and pubs closed, while there was a growth in charity shops and pet shops.



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