200,000 retail job losses forecast for 2021
21 Jan 2021
The UK is forecast to see 200,000 job losses in 2021 as the effects of the coronavirus lockdowns compound an already troubled industry. In 2020 an average of 320 stores were shuttered every week.
New figures from the Centre for Retail Research (CRR) show a bleak retail landscape for 2021, with shopping in high streets and malls less pleasant with social-distancing rules.
The retail industry remains in crisis, says the CRR, “caused by high costs, low profitability, and losing sales to online shopping. These problems are felt by most businesses operating from physical stores in high streets, shopping malls or neighbourhoods. The low growth in consumer spending since 2015 has meant that the growth in online sales comes at the expense of the high street.”
Cash flow problems, high rent payments, closed stores and a surge in online shopping will be damaging to companies who operate physical stores.
Why the outlook is grim for physical retailers
The Centre for Retail Research says the reasons for the issues facing retailers with physical shops are predominantly 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 are impacting the bottom line. The rapid growth of online competition such that by 2018 online sales accounted for around 18.4 percent of total retail merchandise sales, with much of online growth achieved at the expense of bricks-and-mortar retailers.
The third lockdown and tiered restrictions have impacted stores badly as a large proportion of retail trade is lost forever during lockdowns and not recovered via online channels or when stores are open again.
“Although a lot of money has been channelled into the retail sector ‘to preserve jobs’, businesses cannot operate with zero revenue and constant threats of pandemic-driven closure,” said the CRR.
Social distancing, the queues to enter stores, and the frequent requests to use hand santisers and ‘not to touch merchandise unless you are going to buy it’ robs the act of shopping of any pleasure, making it something hazardous. Similarly, the need for what is left of the leisure economy (tea shops, coffee shops, restaurants and public houses) to apply social distancing and high pandemic security makes relaxing over a coffee or a snack that much more fraught.
2020 was a bust year for retailers, with Bon Marché, Peacocks, Debenhams, Arcadia Group, Jaeger and Edinburgh Woollen Mill just some of the companies that collapsed into administration. Who will be next?
Photo Oxford Street via Pexels; Article source: Centre for Retail Research