Consumer experts have warned on Wednesday that high street giants are set to be wiped out within weeks if the coronavirus lockdown continues.
A study of 34 non-food retailers have found that many stores will not survive painting a bleak scenario for the UK’s high street.
Despite government support over half of the non-food shops will run out of cash in just six months, and five out of 34 of the retailers have negative cash flow when the outbreak started.
The study was conducted by professional services firm Alvarez & Marsal (A&M), in partnership with Retail Economics.
A&M said, “Should the lockdown persist into the summer, working capital demands will intensify and large parts of the sector will be decimated as swathes of retailers seek additional funding in order to survive.”
Richard Fleming, Managing Director and Head of Restructuring Europe, A&M said, “Government measures have spared the major retail brands from immediate collapse.
“You could characterise this three-month period as a payment holiday. But prudent retailers are still pivoting their focus towards what cashflow they have and can expect in future.
“This is the essential fact base upon which turnarounds can be built.
“The next few weeks will be critical. Retailers need to ask themselves the tough questions and take steps to address underlying operational issues while they still have the chance.”
Erin Brookes, Managing Director and Head of Retail added, “It has already become clear that the high street will take on a very different form once the pandemic is over.
“Weaker players will, unfortunately, cease to exist, leaving behind a smaller but more resilient sector comprising operators that acted fast.”
Britain’s economy could collapse by a third (35%) during this quarter as the Covid-19 lockdown continues, according to fiscal watchdog the Office for Budget Responsibility (OBR).
The world faces the worst decline since the 1930s depressions, and unemployment would hit 10%, and the government’s deficit could surge by over £200bn.
Ayush Ansal, chief investment officer at Crimson Black Capital said, “For the Office for Budget Responsibility to be pricing in a 35% contraction in GDP during the second quarter brings home the magnitude of the economic fallout that lies ahead for the UK economy.
When the UK coronavirus wide lockdown was implemented on 23 March, bars, restaurants, shops and many businesses closed and sacked or furloughed staff.
The lockdown is costing businesses £2.4bn each day, and in just 22 days since the government announcement, has to date has cost a staggering £52.8bn.
The Chancellor Rishi Sunak has promised tax-payers unprecedented help and wants the lockdown lifted as early as 4 May.
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