The home delivery expert ParcelHero says Britain’s retailers are facing a post-Covid reckoning. Stores that only sell online, such as ASOS and Boohoo, have made big losses, and some shops that only sell on the High Street, such as Poundstretcher, have seen profits tumble.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘In recent months, Made.com became a significant online-only casualty while M&Co, a value clothing store with little online emphasis, was a notable High Street fatality. It closed with the loss of 170 shops and 2,000 jobs. Now more retailers are facing significant problems.
‘However, despite the fact it’s “pureplay” retailers (those who only sell online or in-store) who are largely under strain, it’s jack-of-all-trades Wilko whose troubles are hitting the headlines this week. Despite having 413 stores and 2 million visitors a week to its website in 2021, the financial journal Bloomberg says Wilko is reportedly considering a CVA (Company Voluntary Agreement) to reduce its rates and close stores. In other words, it’s considering bringing in a licensed insolvency practitioner and negotiating with its creditors and landlords to cut costs and reduce rents.
‘Wilko suffered a £36.8m loss in 2021-2 and announced plans to close 15 stores earlier this year, before receiving a £40m funding lifeline. There has been reported speculation about its future, with the GMB Union’s national officer, Nadine Houghton, telling the Guardian newspaper: “Wilko is going through significant changes at the moment and ultimately the business is in a fight for survival.”
‘Despite being around since 1930, Wilko (formerly known as Wilkinson) has never quite established the affection Woolworths, a similar value-driven household goods store, achieved before its sudden demise in 2009. Nonetheless, just as many shoppers still miss the wonder of “Woolies”, consumers would also miss Wilko’s “lots of little wins”. Every town’s High Street needs one general store where we can pick up everything from paint and picture frames to mops and storage boxes.
‘Unlike fellow strugglers ASOS and Poundstretcher, Wilko does offer both in-store and online sales. However, it’s likely Wilko is paying the price for leaving some essential online services until very late. Despite the fact it first went online as early as 2005 (who remembers Wilkinson Plus?), it was only this February that it finally got around to offering essential Click & Collect services for all stores. BOPUS (Buy Online, Pick Up in-Store) and Click & Collect options are vital for omnichannel retailers.
‘Stores that neglect online and Click & Collect opportunities are missing out on sales. For example, sales for the discount retailer Poundstretcher dropped 16% last year, falling from £325.3m to £273 million, while its pre-tax profits fell from £88m to £11.7m. The retailer also closed 17 shops. Previously, it had staged a successful CVA in 2020, closing over 100 stores during the process. However, the fact remains that shoppers cannot buy nor order goods for store collection on Poundstretcher’s website.
‘In contrast, Poundstretcher’s value competitor Poundland has now thrown off some of its online caution. Even though it ditched its “shop.poundland” online store last year, it snapped up the website Poundshop.com and now sells many of its products online through this site. It’s an odd decision considering the far greater brand awareness and loyalty surrounding the Poundland name, but at least it now has an online sales strategy. That’s helped Poundland Group’s latest revenues climb to £1.8bn, up 7.8% on the previous year.
‘So much for the High Street – what about those stores that remain wedded solely to online? It’s been widely reported that online sales are suffering now that we can all get out and shop again, post lockdowns. However, rumours of online’s demise might be greatly exaggerated. The Office for National Statistics (ONS) has reported web sales have stayed at around 26% of the entire UK retail market since May 2022.
‘Even so, the online fashion store Boohoo posted a loss of £90 million for its latest financial year. This compares to a pre-tax profit of £7.8m the previous year, with revenues dipping by 11%, from £1.98bn to £1.77bn. It blamed lower consumer demand, rising operating costs and the revitalised Hight Street.
‘Similarly, this month ASOS revealed an adjusted loss of £87.4m in the six months to 28 February. That follows an annual loss of almost £32m in the 12 months to August 2022. It highlighted cost-of-living concerns and December’s postal strikes as partial causes.
‘As retail settles to a new equilibrium, it will be those retailers with strong in-store and online sales that will ultimately triumph in a post-Covid world. By integrating both, to strengthen BOPUS and Click & Collect services, retailers can survive the retail slump. ParcelHero’s influential report “2030: Death of the High Street” has been discussed in Parliament. It reveals that, unless retailers develop an omnichannel approach, embracing both online and physical store sales, the High Street as we know it will reach a dead-end by 2030.’