The coronavirus pandemic wreaked havoc on British retail last year, and hopes for a better 2021 could be dashed by new virus variants and any additional lockdowns imposed to curb infections.
John Lewis Partnership on Wednesday confirmed plans to close eight locations that “can’t sustain a large store,” it said, noting that 24 John Lewis brick and mortars will reopen beginning April 12, the date long pegged as the earliest when nonessential merchants can throw open their doors. The retailer said the closures affect four At Home shops and four department stores that “were financially challenged prior to the pandemic.”
John Lewis said it will make “every effort to find alternative roles” for the 1,465 employees affected by the retail shutdowns. When it shuttered eight stores last year, the company shifted about one-third of affected staff into new permanent positions.
With shoppers making more of their purchases through digital channels, Johns Lewis expects as much as 70 percent of its future business will originate online. To that end, the Partnership is working to improve Click & Collect service in Waitrose stores and expand local collection points through third parties. “We will also be testing new formats of smaller, local neighborhood shops offering the best of John Lewis,” it added.
Acknowledging that British high streets are undergoing the “biggest change for a generation,” Sharon White, chairman of the John Lewis Partnership, said the company is “changing with it” and will continue to offer the “trusted service” that consumers have come to expect.
The developments at John Lewis Partnership follow retail deals that saw e-tailers Asos and Boohoo absorb some of their bankrupt store-based peers for a rebirth that leaves expensive brick and mortars behind, costing the sector 500 stores and 25,000 retail jobs.
In all, more than 17,500 chain stores closed in 2020, according to data published this month by PwC’s British arm. Nearly 10,000 chain stores were erased from the U.K’s retail landscape last year, it added, noting that 7,655 openings versus 17,532 closures drove a net decline of 9,877.
“Although a decline was to be expected in a pandemic, this is the worst ever seen with an average of 48 chain stores closing every day, and only 21 opening,” PwC said of the research, conducted with the Local Data Company. “The findings starkly compare to five years ago in 2015, which saw net decline of just over 1,000, 50 percent more openings and 25 percent fewer closures than 2020.”
More store closures are inevitably on the horizon, PwC said. “Worryingly, the real impact of the pandemic is yet to be felt as some stores ‘temporarily closed’ during lockdowns, but considered as open in the research, [and] are unlikely to return,” it added. “But while we wait to see the full impact of Covdi-19 on store closures, its effect on consumer behaviors are driving changes.”
Different retail settings saw different fates and fortunes. Retail parks benefited from their anchor “essential” stores like supermarkets being allowed to remain operational throughout the pandemic, while their outdoor formats and free parking dovetailed with social-distancing concerns. In contrast, shopping centers, largely found in densely populated city centers and home to hard-hit fashion retailers and chain restaurants, fared the worst.
“Location is more important than ever as we see a reversal of historical trends,” said Lisa Hooker, who heads up the consumer markets practice at PwC. “For years, multiple operators have opened more sites in cities and closed units in smaller towns. As consumer behaviors and location preferences change, partly as a result of Covid-19, retailers are moving to be where they need to be. Small towns will remain important but we can expect recovery in cities as workers and tourists return, albeit in smaller numbers adopting more flexible working models.”
Hooker said the pandemic’s true fallout is still yet to be seen as bankruptcies and restructurings that happened early this year “still haven’t been captured,” noting that the demise of department stores, specialty retailers and hospitality firms “will leave big holes in city center locations.”
However, PwC retail restructuring partner Zelf Hussain believes that government efforts will “reactivate the high street,” even though businesses are still facing the “twin impacts” of consumers shopping and working differently. “So, although we are upbeat about a bounce back for the high street, we will also see restructurings on the rise as companies look for sustainable solutions,” Hussain added.
Overall, the sector lost 67,000 jobs in 2020 versus the year prior, according to the British Retail Consortium (BRC).
“While the Christmas quarter traditionally sees a rise in retail jobs, the last quarter of 2020 saw the lowest [fourth quarter] job numbers since 1999,” BRC CEO Helen Dickinson said Tuesday. “While the second wave of the pandemic swept away tens of thousands of retail jobs, many more were saved by the Government’s furlough scheme, which is now providing support for 600,000 retail workers, a rise of 200,000 since December.”
However, the retail chief believes the situation is likely to deteriorate if Britain’s third lockdown drags on past April 12, especially because much of the employment created in the sector supported grocery outlets as well as digital operations, in addition to the “many temporary jobs in the run up to Christmas.” Stores located in towns and city centers “continue to employ fewer and fewer people,” Dickinson added.
Though retail remains the U.K.’s largest private-sector employer, Dickinson said it is “imperative that the Government takes all necessary precautions” to ensure quarantine ends, as many hope it will, on April 12. Any further delays to Prime Minister Boris Johnson’s roadmap to reopening would fuel additional store closures and threaten the jobs of furloughed workers,” she added.