The Centre for Retail Research (CRR) has estimated that the UK will see more than 20,000 permanent store closures this year.
This is an increase on the 16,000 seen in 2019 The closures will have the potential to trigger nearly 250,000 job losses as a result of the financial reckoning faced by the retail sector as a result of Covid-19.
A new report from Savills outlines how government closures manifested in the most recent administration activity.
The report states: “A number of retailers have evidently witnessed a dramatic decline in their turnovers of up to 100 per cent, since March 23rd when the government ordered all non-essential stores to be closed during the pandemic and that sespite government intervention measures put in place to support businesses, a series of measures including loans, grants, business rates holidays and a furloughing scheme, retailers are asking the government to support a “furloughed space grant scheme” where the state would cover the fixed costs of businesses that have experienced dramatic falls in turnover.
With little or no turnover from trading, ongoing payment of property costs will become increasingly more difficult for retailers which could lead to further collapses. This, in turn, will have a serious knock-on impact on landlords, including UK pension funds, listed companies and private investors.
The report adds: “The resilience out-of-town assets have shown to non-essential closures at the outset of the pandemic, particularly in relation to high streets and shopping centres, is echoed when collectively analysing the portfolio spread of the operators currently under administration. More than 1,500 units have a question mark over their future, belonging to one of the retailers that have filed for administration in the last six months. Out-of-town assets are responsible for only 12 per cent of these whereas high streets and shopping centres however have far greater exposure accounting for 43 per cent and 37 per cent respectively.”