Return to work is too late to save city centre stores, warn retailers

Many hanging on by a thread as September rents approach, says British Retail Consortium

The slow return of UK workers to their normal place of work will come too late to save hard-pressed city centre stores from going under, the body that represents retailers has said.

Despite a pick-up in spending in August, the British Retail Consortium (BRC) said sales were still below their pre-pandemic level and the lack of people was having a devastating impact on shops operating in places once thronged with workers.

The latest health check of high street and online spending from the BRC warned that September would see more job losses, a gloomy view backed up by the latest survey of employment trends from the consultancy group Manpower.

The BRC said total sales were up year on year by almost 4%, but reported a pronounced difference between booming digital spending and bricks-and-mortar outlets, particularly those selling clothes and beauty products.

In-store sales of non-food items were almost 18% lower in the three months to August than in the same period of 2019, while online non-food sales were 42.4% higher last month than a year ago.

The latest footfall figures from Springboard showed that the number of people visiting high streets rose by 2.6% last week, while Barclaycard said a 9% increase in transactions in restaurants and bars meant its measure of consumer spending had edged above pre-pandemic levels.

But Helen Dickinson, the BRC’s chief executive, said there were signs of a structural change in spending patterns.

“Remote working has continued to help sales in home goods, such as food, computing, furniture and TVs,” Dickinson said. “Lockdown also appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June. Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.”

Dickinson said many retailers were continuing to struggle, especially those that relied on high footfall.

“With rents accumulating and the September quarter payment date fast approaching, many retailers are hanging on by a thread. Unless businesses and government can successfully persuade office workers back into city and town centres, some high street retailers will be unable to afford their fixed costs. Government will need to act fast or September will see more shops close and more job losses realised.”

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Manpower said stronger demand for construction, finance and manufacturing workers meant its jobs outlook had improved from a 28-year-low of -12 to -8 over the past month, but added that the tough employment climate for retail and hospitality workers had not changed.

Mark Cahill, ManpowerGroup UK’s managing director, said: “The headline number illustrates just how tough the labour market is currently. This is still the second weakest outlook we’ve seen since 1992. But the four-point national increase from last quarter, along with a positive trend in several key sectors, is cause for some cautious optimism.

“Despite the end of the furlough scheme in October and signs of a resurgence in the virus in some areas, employers expect the UK jobs outlook to be tentatively heading in the right direction as 2020 ends.”

• The headline and subheading of this article were amended on 8 September 2020 to better reflect the story.

Contributor

Larry Elliott Economics editor

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