A total of 11,120 chain store outlets closed between January and June while 5,119 opened. The net 6,001 closures is a record high and far higher than the loss of 3,509 for the same period in 2019.
The research from retail specialists The Local Data Company centered on all high streets, shopping centers and retail parks in England, Scotland and Wales and found that on average over 60 stores closed every day with 28 opening - a net daily loss of 32 stores.
The data doesn’t include outlets temporarily closed due to lockdown rules so figures could ultimately be higher if they don’t reopen.
The worst affected retail sectors were fashion, mobile phone and betting stores while the areas that saw the most closures were Greater London with 1,008 net closures followed by South East England and the North West.
The towns with the biggest decreases were York (55 net shop closures), Durham (43) and Corby (26).
Lucy Stainton, head of retail and strategic partnerships at the Local Data Company said: “The results from the first half of 2020 are a stark reminder of the challenges faced by retailers in the first six months of the year, which included a national lockdown.
“With each week that passes since retail and hospitality businesses were given the green light to reopen, the likelihood of these occupiers ever trading again in those units reduces.”
She added that 22% of chain stores still remain temporarily closed and that further restrictions including local lockdowns and 10pm curfews for hospitality businesses would continue to have “a devastating impact” on the sector with more closures likely after the make-or-break festive season ends.
The report urges more government stimulus highlighting further movement restrictions, the end of the furlough scheme on October 31st and for the hospitality sector, the end of VAT reductions and business rates relief in March 2021.
There have been so many canaries in the coal mine in 2020 that it would look something like an aviary.
The Local Data Company’s research shows the parlous state of the retail industry but other sectors such as hospitality are in just as dire straits with possibly worse to come.
The most frustrating part of the Coronavirus pandemic and response for directors and business owners is that it’s not your fault if you see your income plunge off a cliff edge.
It’s not your fault that customers are being told to stay away or risk fines or that you might have invested a lot in PPE and other essential equipment to allow you to operate but local or national lockdowns override this and you end up closing temporarily anyway.
None of it is your fault yet you’ve got to bear the consequences as well as you can.
If there’s a silver lining at all, it’s that the decisions facing you and your business should be crystallizing.
Which is where we can play a part in helping you to make the changes that will keep your business alive in one form or another in order to prosper again.
Get in touch with us today and we can arrange your free virtual consultation whenever you want it.
We can explore the circumstances you face and come up with an efficient and effective plan for your company to navigate these to give you the best chance of flourishing in the future.
Options such as administration, CVA’s or insolvency moratoriums sound official and intimidating but could be the keystone to success. Our knowledgeable and impartial advisors will give you the benefit of their years of experience and if there is a way to keep your business going then we’ll find it working together.
But Startups are businesses too and amongst one of the underreported stories of 2020 is the toll that the Covid-19 pandemic and response has wrought on this most dynamic and agile of business sectors.
We’ve covered the latest insolvency statistics for September but some new research which focuses entirely on the startup sector reveals some stark realities facing the tech bros and sisters.
Specifically that over 1,000 tech startups have filed for either administration, dissolution or liquidation since lockdowns began in March with 273 in September alone.
These are the highest monthly figures recorded since 2011 and represent a huge 181% increase on August alone.
Inadequate access to funding is emerging as one of the main factors in the rise of the demise of startups.
Andrew Roughan, author of the research project said: “The energy that used to be palpable in some startup communities is starting to become muted. The energy has been sucked out of some startups where they are unable to access any funding and they see no end in sight.”
He goes on to highlight the disparity between mature companies and embryonic ones when it comes to accessing the available support schemes rolled out by the government such as the Job Support Scheme and the Future Fund.
The latter was designed to support startups through matching loans equal to funding provided by private investors in the business - but argued that this favoured well-funded Venture Capital (VC) funds that already invest heavily in startups and penalised new companies that relied on other forms of funding or less well capitalized “angel investors.”
One startup founder, Dami Hastrup of Moonhub, said: “It wasn’t geared towards genuine startups. We fit all of the criteria but we couldn’t even apply because it has to be done through an investor.
“The issue was that VCs weren’t investing so to fix the problem the government gave VCs more money.”
Even the JSS will do little to support early startups as it mainly benefits employers who can easily scale back their employees hours.
Chris Horner, Insolvency Director with Business Rescue Expert said: “Sometimes even a great idea and a tremendous work ethic won’t be enough to sustain a new business - especially those facing the extraordinary circumstances of 2020.
“But any business, whether they’ve been going six months or 60 years, can benefit from professional advice from experts to help them make critical decisions now that might mean that even if the company has to scale back and go into survival mode now it will be around to have another go in six months time.
“Sometimes circumstances conspire against entrepreneurs and their young companies through no fault of their own but going through the administration or dissolution process professionally can also teach them some priceless business lessons they can apply in their next ventures”.
Hard economic times are always an opportunity for someone.
Whether it’s to pivot a business to provide a service that exactly what’s needed at the right time or to launch the perfect proposition at the right price point and place - there are always some winners.
The opportunity can also be to look at an existing business and see if some fundamental changes have to be made.
Twitter was a messaging app; Facebook was a dating service for Harvard students; Netflix sent DVDs to people in the post and there was Blockbuster in every town in the world.
Restructuring and recreating a company ready for the next move can be the most important decision a director can make and now is the perfect time to consider what’s next for you and your business.
Get in touch with us today to arrange a free initial consultation with one of our expert advisors.
They can help you identify what areas of your business are strong, what is weak and what has to change to give you the best chance of facing the future with the positivity of a Silicon Valley start-up.
The UK-wide scheme launches on November 1st and aims to provide support to eligible businesses by paying two-thirds of an employees salary - 67% - up to a maximum of £2,100 per month. Companies will still be required to pay their employees pension and National Insurance contributions if they receive this support.
The scheme will initially run for six months with a review period in January built in to monitor its effectiveness.
In order to be eligible for the new assistance, a business will be legally required to close for some period over the winter specifically as part of local or national coronavirus restrictions as ordered by the government or their relative local authority.
This also includes businesses that are forced to close their premises but that continue to provide delivery-only or collection services or are offering food and drinks in an outdoor setting. Employees must be off work for a minimum of seven consecutive days to be eligible.
Businesses that choose to close - that aren’t forced by law but see no compelling reason to remain open - will not be eligible at the moment. Therefore, it will only currently benefit those under tier 3 restrictions, which has been confirmed to include wet bars, but not those who serve substantial meals.
It’s important to point out that this is a new scheme, not an extension of the Coronavirus Job Retention Scheme which is closing on October 31st.
The CJRS allowed companies to furlough their workers from July and had 80% of their wages covered although this later reduced to 60% and they were required to pay pension and National Insurance contributions from July onwards.
The new JSS expansion does not require any additional wage contributions from employers as they will be paying 55% of wages under the already announced JSS which will pay a further 22% of wages for workers in “viable” jobs on reduced hours.
Payment will arrive after two weeks of closure rather than three and companies can also apply for cash grants based on the rateable value of their properties.
A company with a property rateable value of £15,000 or under can claim £1,334 per month (£667 every two weeks); properties between £15,001 and £51,000 can get up to £2,000 (£1,000 every two weeks) while properties over £51,000 can get £3,000 every month (£1,500 every two weeks).
Companies will also remain eligible to claim the £1,000 job retention bonus paid per worker and designed to encourage firms to keep workers on their payroll.
It would be easy to roll your eyes and exhale thinking “another new announcement” but each one might be the difference between your company surviving the winter and New Year period.
Another great choice to give your company a real fighting chance of seeing the end of this awful contagion is to get in touch with us.
During a free initial consultation we can tell you about all the temporary support measures you’re entitled to and the many existing options there are to help protect and strengthen all the fundamental areas of your business.
The best thing to do would be to contact us quickly because in these fast moving times, the sooner we can work with you, the more options you’ll generally have to choose from.
The businesses that recognise and act at the start of a tightening situation are usually the ones that emerge from it stronger and ready to go when the circumstances let them.