Despite the Covid-19 pandemic causing mass closures across the GB retail and leisure landscape, there were still 31,405 openings of independent units in 2020 according to a new report released today by retail data consultancy, Local Data Company.
Openings were just outweighed by 32,847 closures and resulted in the independent market shrinking by -0.4% (-1,442 units).
However, this loss was minimal compared to the chain market which declined by -4.5%, equating to a loss of -9,877 units.
The loss in independent units in 2020 was slightly lower than the previous year, with a net change of -1,521 units (-0.5%) in 2019.
This reflects how resilient the independent market has been; despite the remarkably challenging trading environment for all retail and leisure operators, there were still entrepreneurs able to launch new businesses.
The decrease in closures indicates that government support schemes designed to stem the flow of retail and leisure closures during the pandemic were more effective for the independent sector than chains.
Despite the resilience of indies, overall Vacancy Rates increased significantly across the board in 2020.
At the end of 2020, the GB average vacancy rate (retail and leisure combined) was 13.7% - the highest on Local Data Company records (which began in 2013). This equates to a 1.6% increase across the year - the biggest annual jump in vacancy ever recorded.
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Shopping centres have been the most negatively impacted of all location types in 2020, with a net loss in occupied units of 5.4%.
The sharpest increase in vacancy was also seen in shopping centres, rising from 14.4% at the end of 2019 to 17.1% at the end of 2020. This reflects an incredibly tough year for shopping centres as they faced the biggest challenges around crowd management and implementing rigorous social distancing measures, due to the indoor nature of the assets.
The Vacancy Rate in Wales increased the most of all GB nations and regions, rising from 16.4% to 19% in 2020.
109,407 jobs were lost in 2020 across both sectors, 47% more than the same figure at the height of the last recession in 2008.
Sectors
The impact on the Leisure sector has been much discussed and data reflects the stories that were told by occupiers across the year. Pubs (-833), Italian Restaurants (-309), Take Away Food Shops (-245) and American Restaurants (-130) saw the highest numbers of closures, following Bookmakers, which saw a loss of 944 units.
The Pizza Takeaway and Fast Food categories conversely both appeared in the fastest growing categories list as the demand for takeaways skyrocketed.
Once again, Barbers topped the fastest growing list for the 4th consecutive year, with growth of 800 units, 18 more than 2019.
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The real success story of 2020 was Convenience Stores; after four years of decline, this category entered the top 10 fastest growing list for the first time since 2015.
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The category grew by +149 units across the year, feeling the benefit of the increase in localised shopping, the ‘essential’ nature of their offer and the increased demand for grocery shopping due to the shutdown of the hospitality sector.
The outlook:
The ‘worst case’ scenario models the expected net change in the case that retailers remain extremely cautious with openings, with no bounce back and many retailers focusing efforts on existing stores.
In this scenario, closures would be up by 5.7% compared to 2020, while openings would slump by 11.2% as occupiers adjust estates to fit the new landscape.
The ‘best case’ scenario would see openings drop by 2% year-on-year, with strong market recovery and strong consumer confidence brought about by the end of restrictions and good performance of the vaccine.
Conclusion
Despite business support for retailers continuing until the expected reopening date of the 12th April, many brands are likely to reduce their store foot print as the push towards online shopping continues.
Such closures will filter through into the market in 2021, with Arcadia and Debenhams closing stores.
Closures from these two brands alone will release nearly 15 million sq ft of space back into the market.
With the hope of normality returning on the 21st June(England), the leisure and hospitality sector can see better times on the horizon.