More than 235,000 jobs could be lost from UK retail this year alone, while more than 20,000 shops are forecast to close, new predictions suggest.
The Centre for Retail Research (CRR) now predicts that 235,704 jobs will be lost this year, while 20,620 shops will shut in what it says will be the worst year for retail employment since the financial crisis of 2008/2009. By September 1, according to the Centre for Retail Research (CRR), more than 125,000 jobs had already been lost in UK retail while 13,868 shops had closed.
Store closures come at a time when online sales are now expanding quickly, and the high costs of running shops mean they are less profitable. Low investment in stores and “weak forward planning” means that retailers have not acted strongly enough to meet the challenges of new retailing, says the CRR.
But, says the CRR in a recent update, the effects of coronavirus lockdown have trumped all of the above.
“To be closed for three months has deprived most non-food businesses of two-thirds or more of their income at one of the best times of the year, but fixed costs like rent still have to be paid,” says the Centre for Retail Research in the update. “The furlough scheme has been helpful, but not more than that. Food stores, pharmacies and supermarket have seen plenty of business, but the costs of social distancing have considerably depressed their profits.
“Social distancing, the queues to enter stores and the frequent requests to use hand sanitisers and ‘not to touch merchandise unless you are going to buy it’ robs the act of shopping of any pleasure, making it something hazardous.”
It adds: “Several important retailers have already gone bust and we expect many more to do so, making this the worst year since 2008/9. Many companies in a better financial position will not go bust but have to rationalise their store portfolios. Moreover, the massive peak in online sales, whilst physical shops have been shuttered, presents greater problems for British high streets because many shoppers will not return.”
Of the 125,515 jobs that the CRR says have gone so far this year, 43,381 have been lost as a result of administrations, 10,556 through CVAs (company voluntary arrangements) which often see jobs lost as a result of measures including store closures, and 71,578 through more general rationalisations.
The projected numbers for the 2020 full year represent a significant rise on the previous year. In 2019, 143,128 jobs were lost in UK retail as 16,073 shops closed.
The CRR also predicts that retail sales in 2020 will fall by 4.6% compared to 2019, a reduction of £17.2bn, and a figure that is not expected to return to 2019 levels until 2022.
The update comes as the latest footfall figures, from the Centre for Cities’ Street Recovery Tracker , suggests that city centre footfall rose by 7% in August to 63% of pre-lockdown levels. Footfall in central London, says the tracker, was at 31% of pre-lockdown levels, while in Manchester it was 49% and Birmingham 52%. Coastal towns and areas including Blackpool (141%), Birkenhead (124%), Bournemouth (133%) and Southend (116%) had fared better.