The Cost of Lockdown to Retail: 188, 685 jobs and counting

Research conducted by the Centre for Retail Research (CRR) has found shown that 188,685 retail jobs in the UK disappeared between the start of the first lockdown on March 23 2020 and March 31 of this year. 15,153 stores permanently closed their doors in the same period.

83,725 of the jobs were lost because of administrations, which included the collapse of high profile retail giants such as Arcadia Group and Debenhams.
A further 11,986 jobs were cut as a result of restructuring during Company Voluntary Arrangements (CVA), whilst rationalisation programmes which saw supermarkets including Asda and Sainsbury’s cut roles, led to 92,974 jobs being lost. The number of independent store closures and job losses is, as yet, unknown.

Alongside the devastating impact of lockdown, CRR said other factors negatively impacting retail businesses in the UK included:

The high costs of running retail outlets, including rents, business rates and high labour costs;

  • Low profitability caused by high costs, slow growth in sales, squeezed profit margins and heavy price competition;
  • The rapid growth of online competition such that by 2018 online sales accounted for around 18.4% of total retail merchandise sales, with much of online growth achieved at the expense of bricks-and-mortar retailers.
  • Lack of preparation: low investment in stores and weak forward planning to meet the challenges of the new retailing.

All this means that the easing of restrictions will bring renewed challenges, especially in the form of business rates and rental payments.

Robert Hayton, UK president of retail estate adviser, Altus Group, said: “Come July 1, large retailers in England will effectively be returned to full business rates liabilities, calculated by reference to rents being paid six years ago, bearing no resemblance to the here and now, with the fundamental right of appeal to seek valuation adjustments being retrospectively removed.’

The Government has countered that its £1 billion Future High Streets Fund and £4.8 billion Levelling Up Fund are some of the measures it has put in place to help struggling town centres and retail businesses elsewhere.

In an interview with BBC Breakfast, the CEO of the British Retail Consortium, Helen Dickinson, said the issue of business rates must be addressed if the Government is serious about saving retail businesses. She pointed to “huge numbers of reasons” for high street shops going bust, including the general shift to online shopping, but also added:

“There absolutely will remain shops in high streets. But what we need to align behind is real reimagined town centres and high streets that include retail but that go beyond retail…People in retail, and in hospitality, anybody who operates commercial premises, always talks about business rates. These are the taxes that are paid on shops, on restaurants, on coffee shops, and they have just become completely out of line with the economic reality of operating, and so the Government needs to act there to bring that burden down, and that will facilitate much more investment that we need to see to maintain local jobs in local communities and stop those boarded-up shops and restaurants up and down the country.’

Retailers lost to lockdown include the Preston St George Shopping Centre, Grosvenor Shopping Centre in Chester, Intu Properties, Paperchase (pre-pack administration in January), Edinburgh Woollen Mill, Arcadia Group, Debenhams, Hummingbird Bakery, Jessops, Jaegar, Bonmarche, M&Co, Muji, TM Lewin, Bertram Books, Oak Furnitureland, Monsoon Accessorize, Victoria’s Secret, Oasis, Warehouse, LK Bennett, Cath Kidston, Lombok, Laura Ashley, Hawkins Bazaar, Beales and Houseology (amongst many others).

See here for the full report.

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