Some stores might never reopen says analysts, landlords also at risk
Mar 25, 2020
With thousands of shops across the UK having been forced to close, there have been warnings that some might never reopen, even after the coronavirus lockdown ends.
Just over 4,500 shops closed in 2019 but the Centre for Retail Research (CRR) is expecting almost 21,000 to do so by the end of this year.
“We expect large retail businesses to now be looking at exactly how many stores they expect to operate in 2021 and beyond in order to trade successfully moving forward,” Professor Joshua Bamfield, director at the CRR, told the Press Association.
And clearly he thinks many will decide they don’t need (or can’t support) as many as they have at the moment.
That means the CRR expects job losses to leap from the 93,000 last year up to 235,000 in 2020, those losses coming from both stores that are closing and those that will continue but with fewer staff.
The overall retail sector in the UK saw sales of £384 billion last year with the industry employing almost 3.5 million people directly as well as in distribution and other linked services.
Meanwhile, as well as individual stores, there are concerns that store landlords could collapse without support. More and more shops are negotiating rent holidays, and that's in addition to those that will close their businesses completely.
Landlords are currently banned from evicting tenants who can't pay their rent for the next three months.
In a letter to Chancellor Rishi Sunak, property industry body Revo said some property firms could go under without urgent measures to replace the income lost to measures to help tenants. That includes both large landlords and smaller property owners.
Intu, for instance, said this week that it would cut service charges to support its tenants in the second half of the year. But Intu is itself in a critical situation with speculation over its ability to continue. There are also concerns that property peer Hammerson has a debt load that could prove even more problematic than had been expected due to the coronavirus.
And the problem if such property companies were to go under goes much further, potentially impacting the wider consumer economy. Many property firms make up big shareholdings for UK pension funds, which could dent the discretionary income available to pensioners in the future if they failed.
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