The Centre for Retail Research (CRR) has reported that more than 150,000 retail jobs were lost in 2022 due to the number of stores closing down on UK. They reported that on average 43 stores in Britain closed a day in 2022.
The number of retail businesses closing down has reached its highest number in the last five years as shops struggle to survive after the pandemic.
Last year, over 17,00 stores shut down, which is 50 percent higher than in 2021, according to CRR researchers.
The researcher said some businesses were able to keep afloat during the Covid pandemic in 2020-2021 due to Goverment support and furlough schemes, which paid wages even if shops could not open.
However, once Britain began to recover from lockdown in 2022, businesses continued to face a number of challenges.
Erin Brookes, the managing director and head of retail for Europe at Alvarez & Marsal, has said that businesses came out of the pandemic with “much weaker balance sheets” and are now dealing with a weaker economy.
She said: “[Retailers] have now been hit by lower consumer sentiment, alongside any supply disruption and cost inflation.”
Ms Brookes added: “These still have something to offer, so some of the larger, more robust groups will definitely see opportunities around.”
It comes at a time when the number of mergers and acquisitions targeting UK retail businesses increased by 21 percent in 2022, according to the law firm Reynolds Porter Chamberlain.
Sone well-known businesses went under in 2022, such as the online furniture store Made.com, which became very popular during the pandemic, were bought by Next for £3.4million despite previously being valued at £775million in 2021.
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The number of small independent stores closing down was 11,090 compared to big brands, who lost 6,055 stores.
A third of closures were due to insolvencies according to the CRR, at a time the Office for National Statistics reported that the retail industry saw the second greatest number of insolvencies in 2022.
However, nearly a third of closures were branches of a chain that were closing their sites to save money and rationalise their business, such as the case of Marks and Spencers which opened new store branches in different locations.
More than a third of closures were independent businesses shutting down their sites in order to rasionalise, which is when businesses save money by being more efficient and shut down parts of the businesses which is wasting money,
Joshua Bamfield, the director of CBR, said: “Rather than company failure, rationalisation now seems to be the main driver for closures as retailers continue to reduce their cost base at pace.”
He added he expected the trend will continue in 2023, but also said said “a few big hitters may well fail too”.
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The British Retail Consortium (BRC) has predicted that British shops will continue to face difficulties in the future, as they say sales will only rise 2.3 percent in the next six months at best.
Richard Lim, a retail analyst, said retailers have been facing a “perfect storm of pressures”.
Kris Hamer, the director of insight at BRC, said: “The first half of the year is likely to be challenging for households and retailers.
“Ongoing inflation will make sales appear to be rising, but we expect falling volumes as consumers continue to manage their spending,”
However, Mr Hamer suggested the predicted looked better later in the year as sales may grown to 4.7 percent.
He said: “There is cause for optimism in the second half of 2023, when we expect inflation to ease and improving consumer confidence.”