The British retail experience characterized by shopping on the high streets has been a trend in the UK for a long time. However, this trend is changing following the COVID-19 pandemic, which resulted in numerous movement restrictions and the adaptation of technological advancements that have heavily promoted online shopping and online retail stores. The appreciation of physical retail shops is dwindling, and the effects are felt across the retail landscape.
In 2023 alone, nearly 5,000 chain stores shut down across the United Kingdom. This staggering figure translates to an average of 14 stores closing daily from January to December 2023. This revelation comes from an analysis report put together by PwC after analyzing data collected by the Local Data Company. In this article, we break down the biggest high-profile failures of 2023 and discuss the retail outlook for 2024 as we paint a realistic picture of the current UK retail landscape.
The biggest high-profile failures of 2023
2023 marked a significant and radical transformation of the face retail landscape of the UK. This transformation was characterized by the tremendous closure of chain stores across different sectors.
The pharmaceutical sector suffered the biggest blow, with about 787 chain stores shutting down. Of these, Lloyds Pharmacy closed all 237 of its stores in the Sainsbury supermarket branches. This decision led to the loss of an estimated 2,000 jobs.
Pub establishments were another big failure in 2023, as approximately 722 locations closed down. Four hundred of these pubs shut down for good by the first half of 2023, which was as many as the total number of pubs that closed down in 2022. This sector was amongst the heaviest hit by the pandemic and has struggled to recover post-pandemic due to ever-increasing energy costs coupled with the increased inflation rate of the economy.
On the other hand, the banking sector saw the closure of about 583 branches within the year. This, however, comes as no big surprise, as banks have been heavily redirecting their focus to building their online banking infrastructure and services. This trend has seen some towns and suburbs in the UK no longer have a single branch of certain banks. Mobile banking has become the way to go for many users.
2023 also saw the collapse of the popular household and garden products retailer Wilko in August after rescue talks failed. This demise led to the closure of about 400 stores across the UK and the loss of about 12,000 jobs.
Lisa Hooker from PwC, who leads the industry for consumer markets docket, noted that these changes can be attributed to changes in consumer habits with “longer-term growth in spending online mirroring the annual net closures in physical sites.” This trend has influenced the fashion industry, leading to the rise of online-only stores, just like the boom of online UK casinos and the growth of delivery-only restaurants, just to mention a few. Online consumerism has offered clients convenience and access to a wider pool of products.
Retail outlook for 2024
Despite the high number of chain stores shut down across the UK in 2023, it was not all doom and gloom as there was a rise in new stores opened as well. The new stores are mainly comprised of discount retailers, fast food franchises, coffee drive-throughs, and bubble tea shops. It is important to note that most of the new stores opened were outside city centers. Flourishing UK chain store brands such as Costa, Domino’s, and Greggs were the biggest winners of 2023 in regard to new stores, but their success was not enough to offset the store closures of 2023.
The leading retailers in the UK for 2023 were supermarket chains, with Tesco leading the industry. Tesco’s annual sales were approximately £39.7 billion for the economic year 2022/2023. Other leading supermarket brands such as Asda, Morrisons, and Sainsbury’s also succeeded in the market — together with Tesco, they made up over 60 percent of sales in the UK retail grocery market.
With the UK general elections set to be held at the end of this year and interest rates thought to have hit their peak in 2023, 2024 is expected to have greater financial and political stability to support the growth of the economy and particularly the retail industry. The expected drop in interest rates and inflation should heavily boost consumer confidence as the year progresses and create a conducive environment for spending more.
After a gloomy 2023 for the retail industry in the UK, 2024 may just be the year to recover. In the words of Paul Martin, who was the UK Head of Retail for KPMG: “Even if the economic outlook remains muted, one thing history teaches us is that following a downturn, we often experience an upturn, and the question should be, are you doing everything now to prepare for this?”
Tags: UK chain stores
