2019 in Review – Retail
The Retail sector has also seen a turbulent 2019 with little on the horizon to suggest 2020 will bring vast improvements in fortunes for companies or their workers.
Over 85,000 jobs in retail went in the previous 12 months as weaker consumer demand, rising costs, including rents and business rates and an ever increasing switch to online shopping has increased the pressure on the remaining physical outlet units.
Many blue chip retailers have begun closing stores this year including Marks & Spencer, House of Fraser and Debenhams while the list of companies that have gone into administration or liquidation reads like a who’s who of the UK high street:
- Thomas Cook
- Karen Millen
- Mamas and Papas
- Watt Brothers
- The Money Shop
- The Yorkshire Linen Company
- Office Outlet
- LK Bennett
- Pretty Green
- Patisserie Valerie
- Hardy Amies
Retail employee numbers have fallen in every consecutive quarter since the end of 2015 with an additional fall of 2.8% in the three months up until the end of September compared to the previous year.
The underlying analytics for retail also point to a constricting future. Online shopping has risen fivefold in the past decade and with this trend set to only increase. Compare this to physical retailers with too much floor space whose store-based profit margins have halved in the same time while their operating costs have increased by nearly 11% since 2015.
Societal changes are also having an effect. In the 1960s, retail spending accounted for 30% of a households expenditure. This is expected to drop to 20% by the end of the next decade.
Increasing automation and AI means that more jobs could be replaced and the British Retail Consortium have predicted that the 3 million people employed in retail could reduce to 900,000 by 2025.
Chief Executive Helen Dickinson has been campaigning for more support for retail for several years, said: “While MPs rail against job losses in manufacturing, their response to the far larger losses in retail remains muted.”
An unpredictable Christmas shopping period followed by increases in the minimum wage, business rates and more Brexit uncertainty could mean that 2020 is as bad or worse for many of the surviving stores that are sticking it out on our beleaguered high streets and shopping centres.
No matter what the future holds for your company or the retail industry, we’re always here to help. We help distressed companies back to safety and make good companies even better.