IF the high street was in crisis before the coronavirus pandemic, it is difficult to come up with a word which does justice to its predicament as the economy takes its first steps out of lockdown.
The enforced closure of thousands of stores has already been enough to tip a slew of big name clothing retailers over the edge, with Laura Ashley, Oasis and Warehouse, and Cath Kidston all falling into administration in recent weeks.
Debenhams recently announced that a clutch of its department stores will not be reopening, including its flagship outlet in Silverburn, after calling in the administrators for a second time in a year, while earlier in the crisis the fall-out from the pandemic was cited in the collapse of Remnant Kings, the long-established Scottish fabric retailer.
With the economy certain to move into recession in the second quarter, and as fears grow the UK will be hit with a tidal wave of redundancies, it is hard to escape the sense that the problems on the high street have only just begun.
READ MORE: Scottish retailers suffer worst decline on record
Sales figures published last week put into stark relief the uphill battle faced by the retail sector.
The Scottish Retail Consortium (SRC) reported on Wednesday that total sales were down more than 40 per cent during the four weeks to May 2 compared with the same period last year, with even food sales failing to record an uplift during the first full calendar month in lockdown.
“Unsurprisingly discretionary spending bore the brunt of it, recording its worst-ever performance as most shops were shuttered and shoppers switched their focus to essentials,” explained director David Lonsdale. “The spike in online purchases failed to staunch much of the sharp drop.”
The dismal update from the SRC was followed by figures from the Office for National Statistics on Friday, which revealed that retail sales volumes in Great Britain plummeted by a record 18.1% month-on-month in April, on a seasonally adjusted basis.
The drop was even steeper than the 16% decline forecast by economists polled by Reuters.
Though a collapse in retail sales would have been widely anticipated because of lockdown measures, foreknowledge of the downturn offers little comfort to the many businesses now facing a battle for survival.
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And there is little hope of things improving in the short term.
Hopes that the UK economy will bounce back quickly following a sharp decline in the manner of a V shaped recession are now receding as the impact of the necessary lockdown becomes clear.
As reported in The Herald, economists are now predicting a much-sharper fall in gross domestic product this quarter than they did a month ago.
Economists polled by Reuters are now forecasting a 17.5% quarter-on-quarter drop in output in the three months to June, compared with an earlier forecast of a 13.1% decline. However, economists now see a sharper third-quarter recovery than they did the previous month.
Concern over the extent of the economic contraction in the second quarter has come as fears grow over mass redundancies across the UK under plans to unwind the furlough scheme. Reports suggest the Treasury will announce this week that employers will be asked to contribute at least 20% of the wages from furloughed employees from August, sparking fears that this will trigger mass redundancies by firms which have seen income wiped out because of lockdown.
Reacting to the latest ONS labour market statistics, which showed the number of employees fell by 450,000 in April, senior economist Nye Cominetti at the Resolution Foundation warned that, despite furloughing, “Britain could still be facing the highest unemployment levels it has had in over a quarter of a century”.
That the UK faces the prospect of deep and long-term levels of unemployment will naturally be of huge concern to retailers, especially among businesses which retain a significant presence on the high street.
Competition from online platforms and the cost of business rates and rents had already hastened the demise of several big names before the crisis, while causing others to retrench. That trend is accelerating now, and it seems inevitable there will be more bad news to come.
And that is in spite of last night's news that, in England at least, non-essential retail stores can begin to re-open from June 15. The re-opening of stores across the UK is bound to be a gradual process which will involve social distancing, meaning the likelihood is that retailers will be operating at reduced capacity for some months to come.
In such circumstances, the task of saving the high street has never looked so tough.
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