As many as 10,000 jobs are now at risk across the British retail sector as Thorntons today announced the possible closure of up to 180 stores, threatening around 1,000 jobs. This follows news that department store chain TJ Hughes , which employs around 4,000 staff across its 57 shops, has filed an intention to appoint an administrator. A host of other retail chains have hit the buffers or announced down-sizing plans in recent weeks.
TJ Hughes said it will exit at least 120 outlets over the next three years as their leases expire, and also consider the future of an additional 60 shops over the same period.
Thorntons plans to almost halve its portfolio of 364 UK stores, with a plan to focus more on direct selling and wholesale. Some 120 will definitely close over the next three years, as their leases expire, and a further 60 could also close. The company will seek to replace the stores with franchised units in as many locations as possible.
The move comes less than two months after Thorntons suffered its second profits warning of 2011.
Chief executive Jonathan Hart admitted that the high street is suffering badly and said Thorntons needed to close stores in response to “significant changes in consumer shopping behaviour”.
“Our goal is to refocus the business across all channels and seek to deliver industry competitive returns over the next three to five years. Although we see the prospect of weakness in high street footfall and consumer sentiment continuing, I am confident that this strategy is right,” said Hart.
Fashion chain Jane Norman has also suffered since the financial crisis brought about a squeeze in consumer spending. It has closed its stores and fallen into administration, which puts 1,600 jobs in doubt. Habitat’s UK shops outside London, and Homeform, the owner of Dolphin bathrooms and Moben kitchens, were put into administration last week. Last month Focus DIY was also put in the hand of administrators who have since ordered a 70%-off closing down sale.
Our View: These retailers have suffered because of low consumer confidence and a slowdown in spending, while fixed costs have remained high. But beyond the economic pressures, the trend of consumers embracing online shopping, and seeking out the best prices online, is re-shaping the high street, and certainly making it ever-more challenging to compete there. Spreading your offer across the different selling channels is the surest way to adapt.
