Empty Stores and Deserted Shopping Centres – the Dystopian Future of the High Street?
John Lewis announced yesterday the re-opening of another 10 stores but advised that not of all of their remaining 18 stores will open again, leading to further fears of job cuts and a growing crisis in the retail industry. The 156 year old department store empire added its name to an ever growing list of retail giants which have announced closures and job cuts over the last few days. The Arcadia Group (of Topshop fame) has announced a cut of 500 staff in order to restructure and cut costs (20% of their head office workforce), while Harrods has let it be known that they are planning to cut around 700 jobs or 14% of their employees. Many of TM Lewin's staff have also found themselves in unemployment after a pre-pack administration deal led to the closure of all their high street stores, the equivalent to around 600 job cuts.
The sudden announcement from so many major players in the industry is undoubtedly linked to the the phasing out of the furlough scheme which until now had covered 80% of employees salaries. Government support will be reduced starting from August and current plans are for the scheme to end in October, meaning that time is running out for companies to finalise the redundancy process before the rise in wages costs impacts heavily on already strapped finances.
These planned shop closures coupled with non- or late-payment of rent during the crisis has been the final nail in the coffin for shopping centre giant Intu, which went into administration last week. At the moment their flagship locations including The Trafford Centre in Manchester, Lakeside in Essex, and the Metrocentre in Gateshead will continue to trade, but their future is uncertain at best. Consumer confidence is at an all time low when it comes to the safety of shopping in physical stores, with around a quarter of the UK population expected to make the move to online shopping a permanent habit. Retailers are rushing to adapt to this trend with almost 9000 retailers in the fashion sector alone adding new e-commerce payment methods and technology to their online presence.
While many blame the Coronavirus as the sole cause of the industry's problems, the truth is that it's more likely to have simply accelerated the changes that were already beginning to be seen in an industry that had never completely recovered from the 2008 financial crisis. In the intervening years, consumer habits have continued to evolve with the growth of e-commerce, particularly since the explosion in popularity of smartphones, effectively allowing us to purchase online wherever we are, at any time. The current crisis is forcing businesses to adapt more quickly to the growing consumer demand for e-commerce, and the high street is likely to undergo a major transformation as a result with empty lots and To Let signs becoming ever more prevalent. It is a painful evolution for retail, and it may take years for the industry to recover to anything near where it was before. Retailers must be ready to embrace new technologies and learn to adapt immediately in response to consumer trends in order to survive.
Written by Amber Domenech Patey