Chain retailers 'closing 20 stores a day'

About 4,000 chain-store shops shut in first five months of 2011, new study reveals

Zoe Wood
The Guardian, Friday 8 July 201

Liverpool-based TJ Hughes is about to begin closing-down sales to shift its mountains of stock. Photograph: Christopher Furlong/Getty Images

The gravity of the high street downturn is spelled out in new research published on Friday which shows UK retail chains have been closing stores this year at a rate of about 20 a day.

The alarming statistic comes as closing down sales at TJ Hughes's 57 department stores get under way. The Liverpool-based chain went into administration last week, putting more than 4,000 jobs at risk.

The administrators, Ernst & Young, said they were holding talks with more than 30 prospective buyers, but analysts suggested the chain, nearly a century old, would be broken up and shops auctioned.

Tom Jack of Ernst & Young said they were encouraged by the level of interest in TJ Hughes, but needed to sell the mountain of unsold stock sitting in its storerooms in case a buyer failed to materialise.

TJ Hughes, which offered large discounts on brands such as Wrangler and LG, is just one the casualties in a bleak year for the sector as weak consumer spending has devastated the high street. The latest figures from accountancy firm PricewaterhouseCoopers show 375 retailers went bust in the second quarter of 2011, a 9% increase on the same period last year.

Its analysis, which used figures compiled by the Local Data Company, showed chain retailers were closing about 4,000 stores in the first five months of this year. Specialist clothing, shoes and jewellers were the most vulnerable types of shop. Some of that was cancelled out by the expansion of supermarkets, pawnbrokers and coffee shops, but the national vacancy rate is still 14.5%.

Home improvement firm Focus DIY, Habitat and fashion chain Jane Norman are among the high street chains to have failed in the last two months. On Wednesday the administrators of Homeform, the collapsed kitchen and bathroom showroom group, made 557 staff redundant after they failed to find a buyer for its Möben and Dolphin brands.

The sale of the Sharps Bedroom business saved 96 of its 160 showrooms from closure. Homeform's administrator has cautioned that unless a white knight buyer emerges, 453 customers who paid their deposits in cash rather than by debit or credit card – payments totalling £1.5m – would be unlikely to get a refund.

PwC said analysis of recent high-profile retail failures suggested that half of a group's stores would close as a result.

A year ago, TJ Hughes was in the black. The chain made profits of £6.8m on sales of £267m in the year to 30 January 2010, according to the most recent set of accounts filed at Companies House. The documents show the retailer agreed a new £10m loan facility with Lloyds Banking Group that year, with a £3m repayment due in January this year.

The state-backed bank's loan was acquired by Endless in March and it has emerged that it had been sold on to GA Europe, the American restructuring specialist, which is also running the closing-down sales.

Stephen Robertson, director general of the British Retail Consortium, said: "High streets are at the heart of local communities and economies, providing jobs and essential services, but some are in trouble. These figures are further evidence of the tough trading conditions being experienced by non-food retailers in particular. The government's review of the high street must result in urgent action."

"Practical steps are needed to protect and promote our high streets so they remain attractive locations where businesses of all kinds can thrive. This cannot be left to chance." A proactive approach to managing our town centres would benefit customers, communities, retailers and other businesses. Priorities should include keeping business rates down, deterring crime and having good, affordable parking and public transport.

"It's encouraging that not all regions are seeing a fall in retail premises; some have seen a net gain thanks to new stores opening. The priority must be protecting that growth and helping it spread to all parts of the country, boosting town centres and creating jobs." ... ng-per-day