Shop closures: when empty shopfronts undermine town centres

Shop closures are not just evident in official records. They can be seen on the streets: shop windows covered in tarpaulins, premises to let, reduced opening hours, and shop signs replaced by pop-up concepts. For a city, the closure of a shop is never an isolated event. It affects the premises’ owner, suppliers, employees, neighbouring cafés, car parks, public transport and, more broadly, the appeal of a neighbourhood.

In Switzerland, the pressure on high-street retail is mounting. According to the research report, the Federal Statistical Office records 6,500 business bankruptcies in 2025, representing a 5 per cent increase on the previous year. At the same time, a study by Wüest Partner published in May 2026 highlights a fundamental discrepancy: since 2010, private consumption has risen by more than 22 per cent, whilst turnover in brick-and-mortar retail has increased by only around 4 per cent. When measured against the population and available retail space, it has actually fallen by around 9 per cent. In other words, households are spending more, but not necessarily in high-street shops.

The closure of a shop: a wider-reaching shock than a mere terminated lease

A bankruptcy occurs when a business is no longer able to meet its debts and the proceedings aim to liquidate its assets in order to satisfy creditors, in accordance with the Federal Act on Debt Enforcement and Bankruptcy. In practice, for a retail business, early warning signs often appear well before closure: late payments, excessive stock, falling footfall, eroding profit margins, and dependence on a few suppliers or a single peak season.

For a retail SME, the town centre presents both advantages and risks. Visibility, footfall, proximity to other high-street retailers and the area’s image can all support business. But these same factors come at a cost: rent, fitting-out costs, staff working extended hours, logistical requirements and immediate competition. When sales shift to other channels or customers visit less frequently, the cost structure quickly becomes difficult to sustain.

The closure of a business then creates a knock-on effect. An empty premises disrupts the rhythm of a high street. Several closures in quick succession reduce the desire to browse, and thus footfall for the remaining businesses. A restaurant loses part of its lunchtime clientele if the surrounding offices and shops decline. A local tradesperson or service provider may lose contracts. The value of a town centre relies heavily on this mix of uses: shopping, services, dining, leisure, business meetings and social life.

For local authorities, the issue is therefore not merely aesthetic. A weakened high street can have a negative impact on local revenue, employment, the vibrancy of the town centre and perceptions of safety. A street that is bustling during the day and in the evening does not have the same effect as a row of closed shopfronts. This is why the issue of business closures extends beyond the circle of creditors: it becomes a matter for the local economy.

Customers are spending, but traditional shops are capturing less of it

The figures cited by Wüest Partner summarise a shift that many shopkeepers are already observing at the till. Consumption is rising, but a growing proportion of it is bypassing high-street retailers. Customers compare prices, order online, sometimes collect in-store, have items delivered, or prioritise spending on experiences rather than on physical goods. Physical retail is not disappearing, but its role is changing.

For town centres, this shift is pivotal. For a long time, the traditional high-street shop formed the backbone of shopping streets: clothing, footwear, bookshops, jewellers, electronics and homeware. Today, according to a study reported by immobilier.ch, retail space is gradually shifting towards food, catering, services and experiences. This shift does not mean that all shops are doomed. Rather, it indicates that the mere presence of a shop is no longer enough to guarantee footfall.

A shop must now offer a reason for customers to make the journey. This can take the form of advice, repairs, personalisation, product trials, events, a sense of community or trust. For an independent retailer, the aim is not simply to sell a product, but to create a reason for customers to visit. High-street retail is becoming as much a place for building relationships as it is for making transactions.

However, this transition remains costly. Developing an online presence, synchronising stock levels, managing social media, offering in-store booking or collection, and training staff on new tools: all of this requires time and investment. Small businesses do not always have the internal resources to do this properly. A poorly calibrated digital strategy can even add to costs without generating enough turnover. Hence the importance of proceeding in stages, using simple metrics: source of sales, average basket value, return rate, margin by product category, actual footfall in the shop and the ability to convert visits into purchases.

From 2025 onwards, public debt could intensify the pressure

Beyond the market, the legal framework must also be a focus for managers. According to information published by the Canton of Geneva, since 1 January 2025, debt recovery proceedings relating to public-law claims, such as taxes or VAT, have been pursued through bankruptcy proceedings for individuals listed in the commercial register. This change is aimed in particular at strengthening the fight against abuse, but it also has a practical consequence: debts owed to public authorities cannot be treated as a secondary item in cash flow management.

For an SME, the danger often lies in the accumulation of such debts. A deferred tax payment, social security contributions due, a supplier pressing for payment, rent in arrears, followed by a temporary dip in sales: each factor may seem manageable on its own. Taken together, they can set off a downward spiral. Bankruptcy is therefore not always the result of a lack of customers; it can stem from a shortage of cash at the wrong time.

Cash flow management therefore becomes a matter of survival. A business may be profitable on paper yet find itself in difficulty if it ties up too much capital in stock, receives payments late, faces significant returns, or underestimates staff-related costs. Annual financial indicators are not always sufficient. For businesses subject to seasonality, large inventory purchases or significant fluctuations in footfall, monthly monitoring – or even more frequent checks – enables potential problems to be identified before they escalate into legal action.

It is also important to distinguish between temporary difficulties and a business model that is consistently loss-making. In the former case, rescheduling debt, negotiating with the landlord, temporarily reducing stock levels or running a targeted marketing campaign may help. In the latter case, artificially propping up the business may worsen the situation for creditors and the business owner. The analysis must be carried out on a case-by-case basis, using up-to-date documentation and, if necessary, with the support of a trust company or a specialist in debt enforcement law.

Landlords, local authorities and shopkeepers: no one can save a high street on their own

The vitality of a town centre does not depend solely on shopkeepers. Landlords play a central role. A rent set on the basis of past attractiveness can become difficult to sustain if customer footfall declines or the character of the street changes. Conversely, a premises that remains vacant for a long time benefits neither the owner nor the neighbourhood. More flexible models, phased rent reductions during the set-up period, or developments allowing for mixed-use can facilitate the arrival of new businesses. However, each situation depends on the lease agreement, the local market and the landlord’s property strategy.

Local authorities also have tools at their disposal, even if they cannot single-handedly offset shifts in consumer behaviour. Accessibility, the quality of public spaces, signage, permits for the use of public space, parking policy, street-level activities, markets, events and cleanliness: these factors influence the decision to visit the town centre. An isolated shop will struggle to attract customers if the urban environment is deteriorating; conversely, a cohesive whole can strengthen the destination’s appeal.

For SMEs, the challenge is not to face this change alone. Retailers’ associations, collaborations between businesses, cross-promotions and neighbourhood initiatives can restore visibility. A bookshop could partner with a café, a sports shop with a therapist, or a food shop with a restaurant. Such collaborations do not replace sound management, but they do increase opportunities for customer engagement.

The transformation of town centres towards more food retail, catering, services and experiences can also open up opportunities. Retail units need not all be conceived as traditional sales areas. Some may host workshops, showrooms, consultancy services, repair centres, pop-up concepts or hybrid activities. For an entrepreneur, this means testing actual demand before making a major commitment: leases, refurbishments, stock, IT systems and recruitment must remain in line with the business’s financial capacity.

Preventing closure starts well before a crisis strikes

Faced with a rise in business failures, the most useful response is not panic, but foresight. A business owner should have a clear understanding of their margins, fixed costs, break-even point and payment deadlines. These concepts are not just a matter for year-end accounts. They enable a business to determine how much turnover is needed to cover costs, which products actually fund the business, and what decisions can be taken swiftly in the event of a downturn.

Stock deserves particular attention. In the retail sector, it ties up cash and can mask difficulties. Full shelves give an impression of stability, but if items are slow-moving or have to be discounted, the margin disappears. Regularly analysing sales by category helps to strike a balance between product range depth, new arrivals and reducing stock that doesn’t sell.

Customer relations are another asset that is often underestimated. A base of loyal customers, a properly maintained database, targeted communications and a clear value proposition can sustain the business when walk-in trade declines. Omnichannel does not necessarily mean becoming a large sales platform. For a small business, it can start with reliable online information, up-to-date opening hours, easy contact options, the ability to make a booking, or highlighting available products.

Finally, financial management must remain clear-headed. When arrears pile up, it is tempting to wait for a better season or a sales campaign. But the later the assessment is made, the fewer options there are. Taking stock with your accountant, drawing up a cash flow plan, prioritising critical payments and checking legal obligations does not guarantee that bankruptcy can be avoided, but it does allow decisions to be made on the basis of facts rather than under the pressure of payment reminders.

Swiss town centres are not doomed to become rows of vacant premises. But their balance is shifting rapidly. The bankruptcy of a business is the visible symptom of a deeper transformation: new consumer habits, high fixed costs, digital competition, the adaptation of retail space and a tougher approach to certain debts. For SMEs, the challenge is to recognise early enough whether their location, product range and financial structure still align with the market. For towns and cities, the aim is to preserve an ecosystem in which businesses are not merely tenants, but active participants in the local economy.