U.K. retail might be in for a world a pain with a new round of restrictions threatening the outlook for the festive season across the pond.
On Saturday, U.K. Prime Minister Boris Johnson mandated a second national lockdown affecting nonessential businesses like high-street clothing stores, following European neighbors like France and Belgium instituting curfews and other measures to get resurging coronavirus infections under control.
The U.K’s new shutdown is expected to extend through Dec. 2, but could last longer. It may be what prompted Springboard to revise its Christmas holiday forecast, which calls for foot traffic over the six weeks from Nov. 22 through Dec. 26 to fall about 62 percent versus last year. That’s a drastic change from the original forecast of down 32.7 percent. Springboard expects footfall across the U.K will drop by 78.8 percent while the country is locked down from Nov. 5 and Dec. 2, with hardest-hit high streets suffering a decline of 87.3 percent.
“The national lockdown restrictions will now see our struggling retailers miss out on the start of essential weeks of Christmas trading, including Black Friday weekend as nonessential retail remains closed until [Dec. 2] at the very earliest. Although restrictions may ease in December, this is by no means guaranteed as the second wave of Covid-19 ripples throughout the U.K.,” Diane Wehrle, Springboard’s insight director, said.
Presuming Parliament approves the lockdown on Wednesday, restrictions would take effect on Thursday. Wales was already were on high alert after issuing local lockdowns due to local infection increases.
Elsewhere in Europe, France, Italy and Spain began tightening restrictions on movement last month. On Friday, France entered a modified second lockdown through Dec. 1, this time keeping schools and workplaces open. Partial lockdowns are in place in Germany, which began imposing wide-ranging rules on Monday, and in Belgium, which imposed sweeping measures beginning Sunday night.
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Word of the new mandates spurred Associated British Foods plc (ABF), owner of fashion value chain Primark, issue an operational update Monday.
The company is estimating a loss of 375 million pounds, or $484.9 million, in lost sales from the second round of store closures.
“As of today, all Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are temporarily closed, which represent 19% of our total retail selling space. The announced period of closure varies by market. The UK Government announced its intention to close non-essential shops in England for one month from 5 November to 2 December. Assuming that this will be passed by the UK Parliament on 4 November, 57% of our total selling space will be temporarily closed from 5 November,” ABF said. “Trading hours are also restricted in a number of other markets. Uncertainty about further temporary store closures in the short-term remains.”
So far, of its 387 stores, 231 are temporarily closed due to Covid’s second wave.
Primark also emphasized that “[a]ll orders place with our suppliers will be honored,” even as it “implements operational plans to manage the closures and reduce operating costs.”
According to data from Springboard on Monday, U.K. retail destinations saw a 6.2 percent increase in foot traffic from the week before, despite a 53.7 percent decline in locked-down Wales. In contrast, London was in Tier 2 of the country’s three-tier system, while parts of the north had entered Tier 3.
“Footfall rose across all three destination types, however, shopping centers were the main beneficiary. This may well be due to consumers making the most of the opportunity of the half term break to shop early for Christmas in an effort to avoid queues,” Wehrle said. “Needless to say, with Saturday’s announcement of the impending lock down commencing on Thursday, footfall is likely to increase over the forthcoming three days as consumers try to make essential purchases and buy for Christmas before all nonessential retail stores close for a month on Thursday. Whilst next week’s footfall will be buffered by four days of trading, over the next month the results will look very different, with an annual decline that could reach 80 percent.”