Home Business News 5,000 extra stores will fail because of the two-week delay

5,000 extra stores will fail because of the two-week delay

by David Jinks MILT
2nd Jun 20 1:27 pm

Under Phase 2 of the Government’s Covid-19 recovery strategy roadmap, non-essential stores were supposed to open in phases starting on Monday.

In the event, only open-air markets (and some car showrooms) actually opened, with the vast majority of retailers delayed until 15 June. The SME retailers champion ParcelHero says the two-week extended shutdown will mean an extra 5,000 stores never reopen their doors.

At the beginning of the lockdown period, retail experts warned 20,000 stores would never reopen after the crisis eased. Now the e-commerce specialist ParcelHero says the failure of the Government to achieve its target of a phased opening of most ‘non-essential’ stores this Monday will mean another 5,000 shops will fail before the High Street finally resumes business on 15 June.

Under Phase 2 of the Government’s Covid-19 recovery strategy, published on 11 May, non-essential stores were supposed to open in phases from June 1. In the event, only open-air markets (and some car showrooms) have actually opened this week, with the vast majority of retailers delayed until 15 June. ParcelHero’s Head of Consumer Research, David Jinks MILT, says the lockdown has created its own epidemic among High Street stores, and many favourite independent retailers will not survive another fortnight:

‘Following the coronavirus lockdown on 23 March, the majority of High Street and shopping centre stores, including all so-called ‘non-essential’ retailers, closed their doors. This spelled disaster for many stores: the value of clothing and footwear sales crashed by 50.2% in April and household goods sales were down 45.5%.

‘Small wonder the Centre for Retail Research predicted back in March that lockdown would mean 20,000 shops would be lost. The tragedy is that the unexpected further two weeks’ delay in reopening many of Britain’s favourite, local High Street stores will drain many businesses of their last resources and ensure at least a further 5,000 businesses will never reopen.

‘The roadmap in the Government’s recovery strategy plan stated: “Phase 2: Opening non-essential retail when and where it is safe to do so, and subject to those retailers being able to follow the new COVID-19 Secure guidelines. The intention is for this to happen in phases from 1 June.”

The assumption among most retailers had been that it would only be businesses where there would be social distancing problems, such as pubs and cafes, hairdressers and nail bars, that would not be reopening. Most retailers started preparing for a 1 June launch and were both surprised and dismayed when only open-air markets were given the green light. Outdoor markets, even in London where there are now 280, account for just 1.3% of the city’s retail sales. There’s little wonder Frasers Group chief financial officer, Chris Wootton, says reopening on 15 June instead of 1 June will “definitely put some businesses out of business.

‘The recovery strategy document itself admits: “The longer the virus affects the economy, the greater the risks of long-term scarring and permanently lower economic activity, with business failures …and lower earnings.”’

ParcelHero’s latest research indicates a further 5,000 retailers will be stretched beyond snapping point by the two-week delay and the Government’s initiatives to help retailers won’t save them all. The latest figures for the  much-trumpeted Coronavirus Business Interruption Loan scheme (CBILS) showed that only half of loan applications received have actually been granted to SME businesses; on 27 May, 43,045 loans had been approved out of 84,607 applications. The alternative Bounce Back scheme only gives relatively small loans (up to £50,000)  and, unlike CBILS, doesn’t include vital overdrafts, invoice finance and asset finance facilities.

‘Following lockdown, 40% of all department stores and over 25% of all clothing stores made absolutely no sales. It’s difficult to see how small, indie High Street stores that don’t have any significant online sales capacity can survive much longer.

The new cases of coronavirus being reported daily have clearly not dropped as swiftly as the Government had anticipated when its strategy was originally published, partly as a result of its confusing messaging and delayed testing. The consequence is a further two-week delay that could be the final straw that breaks the back of many previously profitable local and specialist shops.

‘We believe indie retailers do still have a chance of surviving this further lockdown period, but that is only if they source home delivery services quickly.

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