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Branch numbers fall for first time since '98

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The total number of chain shop branches in Britain has fallen 0.42 per cent since 1998, according to a new report released today.

Property firm CBRE revealed in its latest Chain Expansion report that the number has also fallen 0.16 per cent since the end of last year as a result of the decline of clothing and card shops.

Over the period, greeting card specialist Clintons Cards fell into administration though is expected to launch a turnaround strategy and CBRE noted that branch expansion totals are set to end the year in “positive territory”.

However, the figures highlight the fragility of the retail sector as the number of net chain stores are predicted to increase by just 0.5 per cent over the course of the year, below the annual average of two to three per cent, the firm warned.

The number of bulky good, service and comparison goods branches also dropped, by 0.40 per cent, -0.92 per cent and -1.09 per cent respectively, although the number of convenience branches rose 1.01 per cent over the period.

Grocers’ current strategies to increase their non-food offerings is having a significant impact,, according to the report, which stated: “Non-food merchandising by grocers and the entry of discounters has had a knock-on impact on niche-players, exacerbating the branch shakeout triggered by the private equity debt legacy and the expiry clusters resulting from shortening lease periods.”

Click & collect is also having an impact given that it is largely store dependent and the firm noted that there is little evidence of the internet affecting space demand.

The report explained: “The branch shakeout to date, mostly via administrations, is due to the recession, not the internet.

“The shakeout will continue until there is a sustained upturn in consumer spending growth.”

Recessionary tail-chopping, whereby retailers dump poor performing stores in the hopes of improving overall profitability in the short-term, is also having a negative affect and concentrating market share among the strongest players, the report said.

Earlier this week, data company Nielsen reported that top UK grocers saw their best four-week sales period of 2012 last month thanks to the Olympic Games, with aggregate sales growth across UK supermarkets increasing 3.5 per cent year-on-year, though CBRE believes that such developments are reducing the reach of smaller retailers.

It noted: “The potential for clawing back market share lost through network contraction is likely to prove small for most retailers, so the current shakeout looks set to have a major impact on long-run sector market shares.”

Published on Friday 07 September by Editorial Assistant

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