Retailers cut 85,000 jobs last year
Retailers have axed 85,000 jobs in the past year as weak consumer demand, rising costs and the switch to online shopping, exacerbated by Brexit uncertainty, have put businesses under increasing pressure.
The job losses in the UK’s biggest private employment sector – with particular importance for women – are the latest sign of a crisis on the high street that has seen the closure of thousands of shops and the collapse of some well-known retail names.
Bonmarché, the fashion chain for over-50s, went into administration last week, putting nearly 3,000 jobs at risk, just weeks after hundreds of jobs were lost at Karen Millen and Coast, which closed all their stores after falling into administration.
Other retailers including Mothercare, New Look and Marks & Spencer and House of Fraser have also been closing stores, while Debenhams is set to close more than 20 in January.
While many retail job losses are the result of closures, thousands are also due to cost-cutting, as retailers try to offset cost increases caused by the rise in the legal minimum wage and the apprenticeship levy, higher business rates and an increase in the cost of goods as a result of the Brexit-led fall in the value of the pound.
That has resulted in a 2.8% fall in the number of retail employees in the three months to the end of September, compared with the same period a year before.
Helen Dickinson, chief executive of the British Retail Consortium, which published the retail employment numbers, urged the government to provide more help for retailers as she said the number of retail jobs had been declining for more than three years.
She added: “While MPs rail against job losses in manufacturing, their response to larger losses in retail has remained muted.”
More pain could be on the way as research from analysts Retail Economics for advisory firm Alvarez & Marsal suggests major chains have 20% too much store space as a result of a fivefold rise in online shopping in the past decade. The report also found that retailers’ operating costs have risen by nearly 11% in the past five years, while store-based profit margins have halved in the past decade.
Changing habits – towards spending on leisure and other experiences rather than goods – are also having an effect. Retail spending, which accounted for nearly 30% of household expenditure in the 1960s, is expected to fall to some 20% of families’ spending in the next 10 years, according to Retail Economics’ analysis of ONS data.
Richard Fleming, managing director and head of restructuring for the European arm of Alvarez & Marsal, said: “Most of the UK’s biggest retail brands are in the midst of a fight for survival. We have already seen some high-profile casualties, and many more are on life support.”
Retail IT bosses expect one in five jobs in their businesses to be replaced by artificial intelligence or automation within five years, according to a survey by recruitment business Harvey Nash and advisory firm KPMG.
The BRC predicted in 2016 that the number of people employed in retail – about 3 million – would fall by 900,000 by 2025 and that many would find it difficult to transition to new roles.
But Fleming insisted that reports of the death of the high street were “greatly exaggerated” as shoppers still enjoyed browsing and the social side of shopping when store are sufficiently attractive.
“We’re entering a new era of retail,” he said, “presenting opportunities for forward-thinking incumbents, entrepreneurs and investors. Those that collaborate with landlords and local authorities will be the big winners going into the next business cycle. This needs to involve striking the right balance between retail and leisure through strategic partnerships, nimble pop-up schemes, agreeing temporary rent cuts that allow companies to reshape their debt and operational structure.”