UK Store Closures Hit 5-Year High

More than 17,000 retail stores closed shop in the United Kingdom in 2022.

The Centre for Retail Research reported Monday (Jan. 2) that there were 17,145 store closures during the year, more than in any of the previous four years, accompanied by 151,474 job losses.

The number of store closures was higher than the 16,073 reported in 2019, which was the second-highest total among the five years included in the report.

The number of job losses in 2022 was the second highest among the five years, below only the 182,564 recorded in 2020.

The report attributes the store closures to business rates — a regular property tax paid by business and based on hypothetical rental values — as well as online competition and continuing effects of the COVID-19 pandemic.

Business rates have not fallen, even though rents have been declining as other retail stores close, the Centre for Retail Research said.

“Online retailers of course pay business rates at the reduced levels applicable to warehouse,” the organization said in the report. “A satisfactory future for high streets will only occur if online retailers pay the same rates as store-based retailers.”

Online competitors also contributed to the closure of brick-and-mortar stores during 2022. The market share of online retailers rose from 6.6% in 2006 to 26.5% in 2021 before dipping “a little” since then, the report said.

While some physical stores have added online capabilities as well, the number of brick-and-mortar locations has continued to drop.

A third challenge contributing to retail store closures is the pandemic, which “has accelerated the pre-existing trends in shopping behavior,” the report said. Consumers have not returned to their pre-pandemic habit, and retail traffic remains 10% to 15% lower than it was in 2019, the report said.

“Shopper footfall may never get back to the levels of the latter 2010s,” the Centre for Retail Research said.

This report comes four days after the Financial Times reported that small business loans are becoming harder and more expensive to get in the U.K.

Less than half of small business loan applications were successful during the third quarter of 2022. Before the pandemic, nearly two-thirds of applications were successful, according to the Dec. 29 report.

“Many small firms now are in a highly precarious position, carrying debts from the pandemic, with the Bank of England raising the base rate, and with funding options getting scarcer and costlier,” Federation of Small Business National Chair Martin McTague told the FT.