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Many retailers given the go-ahead to reopen next month will face a “fight for survival” in the coming months, as they try to restore their fortunes with tough new social distancing and health and safety requirements, a senior retail executive has warned.
Clothes shops, toy stores, electronics retailers and booksellers were on Monday given the green light to get back to business on 15 June. The date was two weeks later than most retailers had anticipated. Other high street businesses allowed to reopen on that date include indoor markets, shoe shops, tailors, auction houses, and photography studios. Outdoor non-food markets and car showrooms will be allowed to open from 1 June.
The British Retail Consortium (BRC), which represents high street stores, said the lockdown had cost non-food shops some £1.8bn in lost sales each week and many retailers would not bounce back.
Helen Dickinson, chief executive of the BRC, said shop groups were looking forward to reopening, but she added: “With sales expected to remain weak, even as shops begin to reopen, many retailers will still be in a fight for survival.”
Chris Wootten, finance director at Mike Ashley’s Frasers group, which runs Sports Direct, told ITV News the extra fortnight of closure would spell the end for some stores: “It will definitely put some businesses out of business. I think if you are a retailer that is living on the edge of your credit line and you’ve basically got no cash left, every day is essential.”
He blamed the Cummings scandal for the delay: “The government clearly said they were going to start phasing opening from the first of June if the science allowed them to. We actually think that the whole Dominic Cummings fiasco over the weekend has clearly made them hesitant to act decisively and made them more cautious.”
Sofie Willmott, an analyst at research group GlobalData, said the unexpected two-week delay was another blow for retailers, especially fashion stores, which have been closed for almost 10 weeks and will now have two weeks less to clear summer stock.
She said: “Stores being shut for a longer period than anticipated will add to the swathes of discounting we can expect when branches reopen. Clothing and footwear is set to be the sector hardest hit by Covid 19 with offline clothing and footwear spend set to plummet over 40% this year.”
The government has provided substantial financial support to retailers, including business rates holidays, paying retailers’ staff through the furlough scheme, changing insolvency laws and urging landlords to do rent deals with under-pressure shop owners.
Income subsidies
Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.
Loan guarantees for business
Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.
Business rates
Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.
Cash grants
Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.
Benefits
Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.
Sick pay
Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.
Other
Local authorities to get a £500m hardship fund to provide people with council tax payment relief.
Mortgage and rental holidays available for up to three months.
Retailers are far from certain that shoppers will flock back to high streets after weeks of shopping from home. Many are nervous about bringing staff back from furlough on to their own payrolls. Many will therefore reopen outlets slowly, as they monitor the level of interest and test the safety measures which must now be in place.
The New West End Company (NWEC), an alliance of central London retailers and hospitality businesses, said its shopping streets were likely to remain much quieter than usual because of the government’s continuing advice to avoid public transport and because about half of London’s West End trade usually comes from international and domestic tourists, who are unlikely to visit until the autumn at the earliest.
Jace Tyrrell, chief executive of NWEC, said that 70% of the area’s customers and workers usually arrived by public transport which people have been urged to avoid. He described the situation as “really challenging”.
The area is working with the mayor of London, Sadiq Khan, on measures such as additional cycle and car parking, bikes for hire and pavement widening to encourage visitors. A sharp increase in the number of people on the UK’s high streets over the bank holiday weekend suggests there could be significant pent-up demand in the UK.
Even though most stores remain closed, high streets witnessed a 49% leap in visitor numbers on bank holiday Monday compared with Easter Monday – the height of lockdown – according to shopper monitoring firm Springboard.
Diane Wehrle, Springboard’s insights director, said she was optimistic there would be a rebound in consumer spending, but that the gloomy economic outlook meant any spending spree may not last long: “An anticipated spending spike could possibly be short lived, as consumers will be cautious and looking at reining in their spend due to ongoing financial uncertainty in many UK households.”
Retail trade union Usdaw urged retailers to work with the union to do thorough risk assessments, as required under the new government rules, and ensure stores are safe for staff and customers when they open.
Paddy Lillis, Usdaw general secretary, said: “Usdaw is concerned that businesses will pay little attention to government advice as they rush to reopen. The government must make it absolutely clear that a business can be closed down if they fail to comply.”
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