Over 13 new retail stores opened each week across England and Wales last year, signalling a tentative recovery in a sector that has been battered by structural decline since the pandemic, according to analysis of government data.
The figures, compiled by tax firm Ryan from Valuation Office Agency records, show there were 507,810 retail premises at the end of 2025 — a net increase of 723 compared with a year earlier. Growth was recorded in every region of England and Wales except the North West, which saw 41 premises disappear over the same period.
Yet the recent uptick masks a deeper, longer-term contraction. Since the end of 2020, England and Wales have lost a net 6,045 retail properties. These are not simply vacant shops; they are premises that have been demolished or converted to other uses and have therefore vanished from communities altogether. London suffered the biggest five-year regional reduction, losing 1,266 retail premises, followed by the South East (down 1,191), the North West (down 719) and the North East (down 672).
Large units carved up as retail shrinks and diversifies
Behind the net growth in store numbers is a fundamental reshaping of the retail property market. Real estate firms are increasingly taking empty large units — often former department stores — and subdividing them into a greater number of smaller retail spaces. This strategy, employed by companies such as Hammerson, is designed to “reinvigorate” assets by filling empty floorspace with food halls, event spaces and rooftop theatres, as well as converting void retail areas into homes, hotels and offices. Hammerson reported strong results for 2025, with net rental income up 23% and portfolio value rising 33%, driven by a focus on prime, experience-led destinations.
Some retailers have also reconsidered earlier diversification plans. John Lewis Partnership, which had explored converting department stores into affordable housing and planned build-to-rent sites, announced in February 2026 that it was closing its housebuilding business and scrapping around 1,000 planned rental homes, citing a “fundamental shift in economic conditions.” The move marked a retreat from its ambition to generate income outside retail, although the broader trend of mixed-use high streets continues, with retail space being rebalanced alongside growing demand for residential, leisure, hospitality and service-led uses.
Persistent pressures: rates, wages and consumer caution
Despite the stabilisation in store numbers, the retail sector faces a battery of headwinds. Higher business rates remain a significant burden. Ryan’s 2026 business rates review found that the retail sector saw a 9.3% increase in rateable values at the latest revaluation, despite the major structural shift in the retail landscape since the pandemic. The revaluation, which takes effect from April 2026 and is based on April 2024 valuations, introduces permanently lower multipliers for retail, hospitality and leisure properties under £500,000 in England, but properties with rateable values of £500,000 and above face a higher multiplier to subsidise that relief. Ryan calculated that 3,480 retail properties with higher values could collectively pay an extra £112 million in business rates, though the government has provided billions in transitional relief to mitigate steep increases. Alex Probyn, practice leader for Europe and Asia-Pacific property tax at Ryan, described the UK as having “the highest property tax burden among comparable economies” and urged retailers to review and challenge their assessments, warning that many premises had seen larger increases in their assessments than underlying market conditions and rental evidence would justify.
Labour costs are also rising, driven by a higher national living wage and increased National Insurance contributions. Consumer sentiment remains fragile: after improving during parts of 2024, the GfK Consumer Confidence Index dropped sharply following the Autumn Budget and fell further in early 2025, reaching its lowest point since September 2023. Concerns about the UK economy, the job market and household finances are weighing on spending. Retail sales volumes in 2024 increased by just 0.7% and remained 2.5% below pre‑Covid levels. The “Golden Quarter” of 2025 proved challenging, with sales volumes declining 0.3% in Q4 compared with Q3, marking the seventh consecutive quarterly decline for the festive period, according to Deloitte. Online retail continues to grow, accounting for 28.1% of total retail sales in Q4 2025, up from 27.0% in December 2024. PwC’s analysis found that chain outlet closures in 2024 fell to their second‑lowest level in a decade, averaging 35 per day, but daily openings remained at 25, still lagging pre‑pandemic rates. Convenience stores and coffee shops led net openings, while PwC warned that rising costs in 2025 would squeeze margins.
Expert view: an over‑retailed legacy being rebalanced
Alex Probyn said the pandemic had accelerated structural changes that were already under way — shifting consumer behaviour, hybrid working patterns and a reduced reliance on traditional retail floorspace. “Many locations were arguably over‑retailed before Covid,” he said, “and high streets have evolved towards more mixed‑use environments, with retail space being rebalanced alongside growing demand for residential, leisure, hospitality and service‑led uses.” He added that the revaluation outcome meant a large proportion of retail premises had seen bigger increases in their assessments than market conditions warranted, and advised: “Retailers should therefore carefully review and, where appropriate, challenge their assessments.”
