The coronavirus pandemic has meant a brutal period for high street retailers, many of which were struggling before last spring as more and more consumer sales moved online.
This trend was particularly noticeable last week with the rescue deals brokered for the stable of brands owned by Arcadia, Sir Philip Green’s bust fashion group, and for ailing department store chain Debenhams. In both cases there was zero appetite from the buyers to take on any of the groups’ combined estate of more than 500 shops.
Instead these major high street presences look destined to become just websites, shorn of their stores and their large workforces. It is a stark illustration of the industry’s tilt towards the web, accelerated by the pandemic, and of a bleak future for jobs in what is still the UK’s biggest private employment sector.
Around 25,000 people are likely to lose their jobs as a result of the failure of Arcadia and Debenhams, and while online groups are expanding – Boohoo is opening a warehouse in Wellingborough with 1,000 jobs – the online model requires far fewer employees than do sprawling department stores.
There will be the physical scars too: between them, according adviser Altus Group, Debenhams and Arcadia occupied 1.4m square feet of retail space – the equivalent of 194 Premier League football pitches.
That means even more gaping holes in high streets and shopping centres that landlords will struggle to fill, not least given the impact of the pandemic on the bars and restaurants that had previously been eager to occupy the spaces vacated by retreating retailers.
No one is pretending that Debenhams and Arcadia, with their tails of also-ran fashion brands, are the best the UK high street has to offer. Both suffered from a lack of investment and of management vision. There are, after all, obvious examples of strong high street store-based players – such as no frills chain Primark, where shoppers queue up to get their hands on low-price clothing and homewares.
Even before anyone had even heard of Covid-19, a painful restructuring of the retail industry was in progress as home shopping grew in stature and out-of-kilter rents and business rates tipped the scales against big store estates.
The pandemic has accelerated this Darwinian process and the fallout in job losses and empty stores will be frightening in the short term, even if renewal is possible further down the line. Over the past two years, according to the British Retail Consortium, one in every 50 shops has permanently closed, and without intervention at this desperate hour, it argues, this number will “only go up”.
There are big issues that need to be resolved if high streets are to recover from these worst of times. The crisis has brought about a much-needed reset of rents, but what of business rates, currently on hold as part of the government’s emergency business support measures? If the owners of Arcadia and Debenhams’ stores can’t find new tenants, they will be on the hook for a £141m bill. Can’t the government think of a way to better to tax booming internet businesses?
If unnecessary shop closures and job losses are to be avoided, business rates relief will at the very least have to be extended beyond April (as has already happened in Scotland). Let’s face it, non-essential shops have been closed since Christmas and may not even be open by the time their bills for 2021 land.
Rates have been reviewed to death by the government: retailers are still in suspense as to the outcome of its current “fundamental review”. But now it has run out of road. Physical retail is dying and without action now more store-based retailers will disappear, making any recovery harder to achieve.
Spread the word: even macho bankers have mental health issues
There is a tendency to discount almost anything a banker might say about their workplace and how stressful it can be. The sky-high pay, the big house, the holidays in Dubai and the personal assistants all militate against any form of sympathy.
This reaction should be set aside. The pandemic has damaged the mental health of millions, be it from the death of a relative, the monotony and restrictions of lockdown or the long hours many have had to put in, often to save their businesses from going under.
Tom Blomfield, the founder and former chief executive of online bank Monzo, said this weekend that he was struck down by anxiety as investors pulled support and customers stopped spending in the early weeks of the first lockdown.
Blomfield was already stressed when the pandemic hit, but the pressure he faced in the weeks after the first lockdown was so intense he had to take a step back. First he surrendered his chief executive role to become president, then he quit the company altogether. He joins a list already including Jayne-Anne Gadhia, the former Virgin bank boss, and António Horta-Osório, chief executive of Lloyds, who have also publicly told of their battles with stress and anxiety.
Three lockdowns have had a major impact on the mental health of many in the UK. Among a welter of figures showing rising anxiety levels, Glasgow University research found that during the first lockdown, one in four respondents reported at least moderate symptoms of depression.
Banking is a macho industry that finally looks as though it is addressing the need for cultural reform. The hope must be that hearing about the difficulties of top bosses will encourage other directors to review how they manage their own wellbeing – and that of their staff.
How long will Kwarteng’s stand on workers’ rights last?
There should be praise for a Conservative minister who openly rejects his youthful dalliance with crude free-market policies. Is Kwasi Kwarteng deserving of such praise? Having contributed to a 2012 collection of essays that called for a bonfire of regulations and branded British workers “idlers”, he appears to have broken with his past.
After his recent promotion to the cabinet, Kwarteng found himself in charge of a controversial plan to downgrade EU employment protections, a plan apparently inherited from his predecessor as business secretary, Alok Sharma. The plan is understood to have included proposals to end the 48-hour maximum working week and remove overtime earnings from calculations for certain holiday pay entitlements.
The response from Labour and the unions to any prospect of weaker protections for workers was immediate. They said it was an outrageous move in the middle of a pandemic, when so many were either on furlough and in fear for their jobs or being overworked by employers looking to survive the pandemic.
Last week, the secretary of state for business, energy and industrial strategy announced that the plan had been axed, saying: “I made it very, very clear to officials in the department that we’re not interested in watering down workers’ rights.”
It is a U-turn that this newspaper had foreseen.
Those in the cabinet who argued for the axing of the plan will have focused on the likely reaction from Tory MPs freshly elected to so-called red wall seats. The many Brexit voters in these constituencies didn’t vote to leave the EU only for the government to hand their employers a bigger whip to beat them with.
There is a worry, though. Kwarteng is still aligned with a sizable group of free-marketeers in the cabinet. And when the pandemic crisis has eased, they will without doubt once again press their case for deregulation. When it comes to preserving workers’ rights, this is a skirmish in a longer war.