Retailers are closing an average of 20 shops per day as squeezed consumer spending takes its toll on the high street.
Retail insolvencies shot up by 9 per cent to 375 in the second quarter of the year, with clothing stores, jewellers and bookshops the hardest hit, according to a report from PricewaterhouseCoopers (PwC) and Local Data Company, published yesterday.
Mobile phone shops, music shops and pubs and nightclubs are also struggling as the combination of rising inflation and looming government cuts drag household incomes to their biggest slide for three decades, according to some estimates.
A string of big names have either folded or committed to shrinking their operations in recent months. Former high street stalwarts such as Thorntons, Jane Norman and Habitat are all but gone, while the likes of Carpetright and Mothercare are cutting back.
According to the PwC research – which looked at 300 town centres across the country – since the start of the financial crisis, struggling retailers either have closed, or plan to close, on average half their portfolios.
There were some glimmers of light amid the doom and gloom yesterday. Supermarkets, convenience stores and cafés are bucking the trend with growth in the first quarter, while pawnbrokers, take-away restaurants and bookmakers also doing relatively well.
There are also stark regional variations in the PwC findings. The number of shops in Scottish town centres has fallen 30 per cent this year, with contractions of 19 per cent in the south-east of England, and 17 per cent in the West Midlands. But there have been big increases elsewhere – such as the 48 per cent rise in shop numbers in the south-west – leaving the total across the country slightly up over the year so far.
The latest "footfall" numbers from Experian, published yesterday, also offered some hope to retailers. The index shows growth of 0.2 per cent in the number of shoppers in June, the first year-on-year rise since January (although with the caveat that last June's numbers were depressed by the distraction of the World Cup).
But even before the financial crisis, retailers were feeling the pinch as shoppers increasingly looked for bargains online. In 2007, just 4 per cent of people were regularly buying on the internet, a figure that has shot up to 14 per cent, according to a survey of 1,000 consumers earlier this year.
Experts are predicting retailers will continue to struggle for the next six months at least, with clothes shops likely to continue to bear the brunt of the sector's difficulties. Mike Jervis at PwC said that retailers need to take drastic measures to ensure their survival. "They cannot afford to bury their heads in the sand, and must think about surgery before the problem becomes terminal," he added. "Retailers need to engage with their stakeholders early, especially banks, landlords, credit insurers and their staff."