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Friday 17 February 2012

Retail Sales Jump Despite Mass Store Closures

Nick Martin, North of England Correspondent
UK retail sales rose unexpectedly in January, according to official figures, despite other data revealing mass closures of chain stores on the high street.    
Retail sales for the first month of 2011 were up by 1.9% year-on-year, according to Office for National Statistics (ONS) figures published on Friday.
Sales volumes, excluding fuel, were up by 1.2% compared to the previous month.
In January an estimated £24.6bn was spent in the retail sector, compared to £42.1bn in December and £23.6bn in January 2011.
The surprise jump helped drag retail inflation down to its lowest level for more than two years.
Shoppers benefited from heavy discounting as retailers tried to lure in cash-strapped customers.
But with internet outlets and supermarkets among the biggest drivers of the increase in sales volumes, fears persist for the future of the UK high street. 
Separate data published on the same day revealed big high street chains closed an average of 14 stores a day across Britain in 2011.
Multiple retailers like bookshops, electrical stores, home furnishings and menswear shops fell in numbers while charity shops, pound stores and credit unions bucked the trend.
According to data compiled on behalf of PwC by the Local Data Company (LDC), multiple retailers reduced their high street presence by 0.25% - a reduction of 174 shops in 2011.
Mike Jervis, PwC insolvency partner and retail specialist, said: "A common feature of the retailers in distress who we are dealing with is that they have too many locations.
"Relatively long leases have been entered into in a growth phase of the economy which are no longer appropriate.
"Electricals and bookshops have suffered as these products are now increasingly bought online but retailers in this sector are typically carrying unnecessarily large property portfolios."
In the Greater Manchester town of Altrincham, a quarter of all shops are empty.
Mark Rubin, a retail space landlord says some of his tenants are struggling to keep open.
"On a number of occasions I have listened to tenants and decided the rent should be lowered. But that's not a situation that can continue forever. I have to explain to them that one day the landlord is going to be in trouble."
Florist Janet Smith has been trading for 27 years but recently nearly went out of business. Her landlord reduced the rent.
"It took the strain off us - the landlord knows that he would rather have us here than have to take over the property himself," she said.
"But the real problems are with rates - they are too high and there is no negotiation when times are bad."
Matthew Hopkinson, director of the Local Data Company, said: "In the past the closures were offset by openings but 2011 has shown a true decline in multiple retail and leisure outlets across Great Britain.
"With the move to out-of-town locations and the numbers of closures being announced currently, this decline is likely to continue into 2012 and thus lead to a rise in vacancy rates."
Some experts believe the high street needs to rethink how it attracts trade or run the risk of "terminal decline".
Tarlok Teji, Retail Analyst at Manchester Business School said: "The majority of new space has been in out of town shopping centres such as Westfield in White City, London and Liverpool ONE.
"These are substantially better shopping environments than the high street often with free parking so it's not a surprise that consumer footfall migrates away from the high street.
"Add the growth of on line shopping and we then have a high street in terminal decline."

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