Scottish shop closure rate below UK average amid ‘willingness to invest in bricks and mortar’: John Lewis job fears

Latest data shows that throughout 2023, a total of 1,069 stores closed their doors, while 732 were opened.

Scotland’s shop closure rate remains below the UK trend, though one store still closed every day on average throughout 2023, new figures suggest.

The latest data from PwC and The Local Data Company (LDC) reveals that three stores closed each day in Scotland last year, with two new outlets opening, resulting in a net closure rate of one store per day. The bi-annual research tracks more than 200,000 outlets in some 3,500 locations across the UK to gain a picture of the changing landscape of high streets, retail parks, shopping centres and stand-alone outlets.

Throughout 2023, a total of 1,069 stores north of the Border closed their doors, while 732 were opened - resulting in a net loss of 337 shops and outlets belonging to multiples and chains - classed as those with five or more outlets.

Wilko, which folded in 2023, was one the most dramatic retail sector collapses in recent years.

With the overall reduction at -2.1 per cent, Scotland’s closure rate in 2023 is around one third higher than the 2022 rate of -1.4 per cent, but remains lower than the period between 2017 and 2021, when closures peaked at a rate of -4.1 per cent in 2021, during a particularly challenging period for retailers. It is also marginally lower than the UK average of -2.3 per cent, according to the analysis.

The past two or three years have seen several big names disappear from the high street, including the likes of Debenhams and Wilko, leaving large empty units, while others have been downsizing or restructuring their store portfolios leading to the closure of several Marks & Spencer sites on Scottish high streets and John Lewis’ Aberdeen department store.

The latest PwC/LDC study shows that retail park stores remain the most resilient outlet type, demonstrating a 0.3 per cent increase in the number of outlets across Britain during the course of 2023, while standalone stores - as well as those in shopping centres and high streets - all experienced net closures (-2 per cent, -2.5 per cent and -3 per cent, respectively).

The hospitality sector has seen a notable rebound, leading to a jump in new store openings. The data shows that five of the top seven new opening categories were in the hospitality sector, with takeaways, food-to-go, cafés, coffee shops and restaurants said to be “flourishing” in 2023. Also among the top new opening categories were supermarkets and petrol stations, with the latter thanks to a growing demand for electric vehicle (EV) charging stations.

John Lewis, which has posted its latest financial results, shut its landmark Aberdeen store in 2021.

Ross Marshall, partner at PwC Scotland, said: “Our research shows that, despite the continuing annual reduction of stores across Scotland, there is a willingness from business to invest in physical outlets, with two new stores opening per day for every three closed throughout 2023. It demonstrates the continuing evolution of our high streets, retail parks and shopping centres with a real shift towards out of town and retail park locations and a resurgence in the hospitality sector - demonstrating that ‘café culture’ is going nowhere.

“Across Scotland in the last few months alone, a variety of new eateries and bars have opened their doors, and entrepreneurs are making the most of the franchise model to bring big names to key Scottish locations,” he added. “This willingness to invest in bricks and mortar for shoppers is encouraging - especially given that PwC research shows the majority of those aged 35 and under prefer in-person experiences, and that consumers generally believe that stores beat online when it comes to customer service and after-sales service.”

Meanwhile, John Lewis Partnership has cautioned over possible job cuts in the year ahead as part of an overhaul as the group revealed it would not hand out a staff bonus once again despite returning to the black. The retail stalwart’s new chief executive, Nish Kankiwala, confirmed a “few hundred” roles were axed last year under moves to save £88 million in costs, although many of the job cuts were through staff turnover and not replacing workers when they left. He added: “We’re looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we’ll use [staff] attrition in the same way as we have done in the past. If there are unfortunately, regrettably, redundancies then we’ll talk to our partners first.”

The employee-owned group - which runs the eponymous department store chain and the Waitrose supermarket business - reported pre-tax profits of £56m for the year to January 27 against losses of £234m in the previous year. It said that after “careful consideration” it would not pay its 76,000 workers an annual bonus for the second year running, marking only the third time since 1953 that it has not made the payout. But the firm said it would increase overall pay for employees by a record £116m this year.

It was recently reported that the partnership was mulling a 10 per cent cut in its workforce over the next five years as part of aims to save £900m by 2027/28. Kankiwala - a turnaround specialist who was last year appointed as chief executive - said that while the group did not recognise the 10 per cent figure, it was likely there would be fewer roles within five years.

The partnership said it would look to increase investment in 2024/25 by 70 per cent to £542m, which would focus on modernising technology, refreshing its shops and simplifying the group. Chairwoman Dame Sharon White said the group would “unashamedly focus on investing back into our retail businesses” over the year ahead.

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