John Lewis and Boots both cited the fast shift from in-store to online shopping during the Covid-19 pandemic as they today announced plans to shut shops, putting 5,300 jobs at risk between them.
During the coronavirus pandemic, John Lewis says online sales have risen from 40% of its total sales to the point where between 60% and 70% of sales could be online this year and next year. The John Lewis Partnership now says it will not reopen eight of its 50 shops from the coronavirus lockdown. Of those, described as "financially challenged" even before the health crisis hit – two are department stores – in Birmingham and Watford. Two are located in travel hubs – at St Pancras and London Heathrow Airport – and four are its At Home format stores, in Croydon, Swindon, Newbury and Tamworth. Some 1,300 staff will be consulted as a result. While the retail group is closing John Lewis stores, it is also investing online. The group has already expanded delivery services at its Waitrose supermarkets and says it also plans to invest in its ecommerce business.
The partnership plans to report back later this month following a major strategic review into how it will now develop the remaining 42 John Lewis shops alongside its ecommerce operations. Those stores that are not yet open are scheduled to reopen on July 30, although the Leicester John Lewis will open after the local lockdown there is lifted.
John Lewis Partnership chairman Sharon White said that redundancies would be a last resort and the business would aim to keep as many of its staff as possible. She added: “Waitrose and John Lewis are two fo the UK’s most moved ad trusted brands and we have adapted to the challenges of the pandemic by responding to the new needs of customers. We will soon announce the output of our strategic review which will ensure our brands stay relevant for future generations of customers.”
Meanwhile, Boots is accelerating its transformation plans – as customers take their shopping further online. That puts 4,000 jobs – or 7% of the UK workforce – at risk, while it the business will invest further in omnichannel. The company will close 48 Boots Opticians shops and reduce its UK support office headcount by 20%. The news comes after more than 16,000 members of staff were furloughed during lockdown, store hours were cut and rents have been reduced at some sites.
Stefano Pessina, executive vice chairman and chief executive of Boots’ parent company Walgreens Boots Alliance, said: “Shopping patterns are evolving more rapidly than ever as consumers further embrace digital options, spurring us to accelerate our ongoing investments in digital transformation and neighbourhood health destinations.”
The news came as Walgreen Boots Alliance reported the financial cost of Covid-19 would come to as much as $750m (£586m), mostly related to a dramatic fall in visitor numbers to Boots stores – down by 85% in April, as shoppers were advised only to leave home for food and medicine. While most of its shops remained open for pharmacy and sales of essential goods, its beauty and fragrance counters were “effectively closed”, and more than 100 high street, station and airport locations were also closed, along with almost all of the Boots Opticians shops. At the same time, falling visits to doctors and lower admissions to hospitals meant that its pharmacy volumes fell around the world. WBA wrote down the value of the Boots UK business by $2bn (£1.6bn) and now aims to increase cost savings, upping its target from $1.6bn (£1.25bn) a year to more than $2bn a year.
In the third quarter of the financial year, WBA reported sales of $34.6bn (£27bn), up by 0.1% on the same time last year and an operating loss of $1.6bn, down from an operating income of $1.2bn (£0.9bn) a year earlier – largely as a result of the $2bn write-down of Boots UK’s value.
At Boots UK, sales fell by 27.7% and like-for-like sales by 48% as, says WBA, shoppers consolidated their in-store spending to supermarkets. But online sales rose by 78% at the same time.
The Centre for Retail Research has previously said that it expects 235,704 jobs to be lost as 20,620 shops close in 2020 alone. That’s 27.1% more than in 2019, when 16,073 shops closed.
At the time of its prediction, in Apil, the centre predicted that many shops that closed during lockdown would not reopen, and others would be culled later on as retailers review operations and cut costs in order to survive.