Britain’s beleaguered retailers cut jobs at the fastest rate for more than a decade over the last 12 months, as the pandemic accelerated the longstanding decline of the high street.
Despite official figures last week that showed some signs of recovery as lockdown restrictions eased, a gloomy CBI report on Tuesday showed the level of staff losses in the year to August were the highest since February 2009, with fears of worse to come.
The CBI’s monthly distributive trades survey found that more than half of retailers said they expected to reduce the number of employees in the next three months as the pandemic continued to take a toll on consumer confidence.
Last week, Marks & Spencer took the total number of job cuts it has announced since March to 7,950, more than 10% of its workforce, one of a long line of retailers that have struggled to cope with the decline in footfall since the lockdown was imposed in March. The department store group John Lewis has announced 1,300 jobs will go while Boots is cutting 4,000.
Shops in airports and train stations, many of them still closed, have also been earmarked for job cuts. WHSmith was among the retailers to say they feared only a small proportion of outlets would reopen when it outlined plans to cut 1,500 staff.
A gradual reopening since May has resulted in a return to pre-crisis levels of retail sales, according to official figures, but footfall has remained at about two-thirds of what it was this time last year.
Any bounce-back during the summer has mostly come from online sales, which have grabbed a bigger slice of retail spending since most shops were forced to close. Tesco announced on Monday it would make permanent 16,000 temporary jobs to cope with the surge in online grocery trade.
The CBI survey, which provides the most recent snapshot of trading, showed a slight fall in retail sales on a year ago, after a recovery to parity with last year in the July survey. The decline was broadbased across sectors, with only grocers, furniture and carpets, non-store and “other” goods sales achieving growth.
Retail jobs losses have accelerated since May, when the chancellor, Rishi Sunak, confirmed the furlough scheme would end in October.
The balance of employers saying they would reduce their headcount was -20 in May before weakening to -45 in August and -52 for the three months to November.
Alpesh Paleja, the CBI’s lead economist, said: “The furlough scheme has proved effective at insulating workers and businesses in some of the worst-hit sectors during the pandemic, but these findings reinforce fears that many job losses have been delayed rather than avoided.
“The latest survey shows that trading conditions for the retail sector remain tough, even against the backdrop of business slowly returning. Firms will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.
“As a result, further support may well be needed for the retail sector if demand continues to disappoint. Extending business rates relief will go a long way towards alleviating pressure on retailers’ cash flow.”
Howard Archer, chief economic adviser to the EY Item Club, said official figures would show a substantial rebound in retail sales and the economy more broadly in the third quarter. The warm weather and a backlog of work dating to before the lockdown had generated a surge in activity, he said.
Nevertheless, consumers’ incomes remained under pressure after a steep fall in employment, “while others will be concerned that they may still end up losing their job once the furlough scheme ends in October”, Archer added.
He has forecast the unemployment rate would increase to about 8.5% by the end of the year. The rate was 3.9% for the three months to June.
“The weaker-than-expected August CBI survey is a reminder that there is considerable uncertainty as to just how willing and able consumers will be to spend beyond the third quarter. Persistent consumer caution is seen as a significant risk that could limit the UK recovery,” Archer said.