That’s according to research published in September by the Local Data Company (LDC) - ‘H1 2022 retail and leisure trends analysis’, which has delved into the numbers underpinning the sector’s health and fortunes.

While optimism for a full-on economic recovery from the pandemic may have stalled in recent months for a variety of reasons, David Scott, our Head of Retail and Leisure, says the sector is continuing to innovate and adapt through the use of data.

“The data in this report give a powerful overview of what’s happening in our sector, but its important that businesses are using data at  a granular level too,” says David. “A recent new metric I’ve seen is hoteliers using kilowatt hour cost per bedroom – this helps them properly factor this into their overall cost structure. Robust data should be used to inform a better business decision. For me, it’s fundamental.”

Overall, the report states, the fortunes of the sector in 2022 will be an improvement on those in 2021. Of the five key findings the report makes, four are positive for the sector. They are:

1. Fewer retail casualties led to a record net improvement in net change in units. Closures across Great Britain fell 7% year on year, from 26,703 in H1 2021 to 24,832 in H1 2022.
2. Vacancy rates fell 0.4%, driven mostly by leisure businesses.
3. Shopping centres saw the most significant recovery of any location type, with percentage net change in units falling from -3.3% to -0.3% in the year to H1 2022.
4. Hospitality remains resilient despite the end of business stimulus packages, and the independent sector grew by 0.9% over H1 2022.
5. City centres continue to lag behind other town segments, however, with a new normal yet to be reached.

David explains that while the narrative for the sector has been downbeat, our low expectations often don’t materialise. He says: “As a sector we have been cautious for a very, very long time – facing challenges from Covid, supply chain problems, landlord negotiations, etc. Despite these headwinds as the report highlights the sector continues to adapt . The next six months will be difficult as discretionary consumer spend will fall, but you’ve got some really resilient, entrepreneurial characters out there and some fantastic businesses.”

Lucy Stainton, the Local Data Company’s Commercial Director, says that while no one has a crystal ball to perfectly see how disruption and policy response may play out, “having live, accurate and quite detailed data is important because we understand where we’ve come from, and where we’ve evolved to, at this point in time. The report has good baseline statistics that give everybody a kind of bedrock for decision-making when it is so uncertain and so changeable.”

At an event hosted by NatWest to launch the report, a panel of business leaders took time both to reflect on the successes of H1 and to address the economic headwinds that lie in store.

For Mark Newton-Jones, board member at Mothercare and IKEA, inflation and the knock-on consequences of the pandemic are the most pressing issues businesses face. “To just recover from the peak period of the pandemic, we were looking at some time around the early part of 2023 before we get normal global shipping, with containers in the right place, enough ships back on the water,” he said. “In the period leading up to this and through all of this period, we’ve had massive inflation.”

With fewer boats in operation and the price of shipping increasing, he argued, the cost of supplying certain low-cost goods has become too high. “You end up completely changing your business operation to only ship things that are profitable, which means the product you have on the shelf certainly has to change, you have to change your range.”

Beyond the issues that businesses face in supply chains and inflation, he was also vocal on the paradigm shift in working attitudes brought about by the pandemic. “I think the pandemic has done some strange things in terms of people’s views about going to work, where you go to work, whether you go to work at all – the whole [situation] has tipped things on its head. And there is a whole group of the population that have taken themselves out of the workforce.”

As the founder and CEO of Sook, a real estate business that offers bespoke pop-up venues for small businesses, John Hoyle often witnesses a younger generation harbouring divergent attitudes to work. “We’re seeing a lot of Generation Z who would be entering the labour market set up their businesses and making money online and using us because we’re the only people who are offering that ability to do so. And that’s a fundamental shift which really does challenge the dominance of bigger brands.”

It’s a trend that Miranda Mathews, UK and Ireland Managing Director at the Treatwell beauty platform, sees in the hair industry as well. She said: “There’s a massive move to self-employment, and more than 60% of hairdressers are now self-employed… There’s a massive shift to doing home treatments as well.” This, she added, is because many hairdressers see the advantage of being in charge of their own schedules.

As Chief Executive of the Retail Trust, Chris Brook-Carter emphasised the well-being and engagement of staff, many of whom face cost challenges that ultimately affect the health of retailers and leisure businesses.

“Our data at the moment tells us that one in three colleagues in the sector are looking to leave the retail industry for good, and 25% of all line managers in retail are looking to leave this sector for good,” he said. “This is an issue that we’ve got to start getting onto Board agendas… [it’s] just as important as one of the weekly sales figures.”

Download the latest LDC report, which details how the UK retail and leisure market changed over the first half of 2022.