128,000 high street jobs at risk as string of retail shops set to close down | City & Business | Finance
The outlook comes as the retail industry braces for a difficult holiday trading period as shoppers feel the pinch amid the ongoing cost-of-living crisis and record inflation.
“People were like, ‘We’re out of money,'” said Professor Joshua Bamfield of the Center for Retail Research.
Numerous large retailers have gone out of business in 2022, including Sofa Workshop and household retailer Made.com. Fashion chain Joules filed for bankruptcy earlier this year before the company was bought by Next.
Now a number of retail analysts have predicted another tough 12 months for the fragile sector, including a repeat of the 15,000 store closures and 128,000 job losses recorded this year.
Professor Bamfield said: “I just see a continuation of the process that we have seen in 2022 where we have fewer and fewer retail outlets selling goods and more hairdressers and spas and tattoo parlors and so on. I expect the 2023 numbers to look very good the same as this year.
“We’ll know for sure in May or June, but the fact that so many companies have gone bust in the last four weeks is perhaps a sign of the times. People said to themselves: ‘We don’t have any more money’. “
On the subject of job losses, Prof Bamfield added: “Many retailers are desperate for employees.
“But if you have a store with nine or 10 employees, but the footfall is down 10 or 15 percent compared to 2019, you might say, ‘Let’s see how we do with six employees.’ This process continues. “
The retail guru said he forecast retail sales to fall by 3 percent in 2023.
Prof Bamfield also estimated that the combination of high energy costs, wages and business rates meant that many stores had no chance of turning a profit at any point over the next 12 months.
Similarly, retail analyst Richard Hyman forecast a bleak future for the High Street as figures for non-food retail sales fell 1.2 per cent in the three months to the end of October. He explained: “Not enough stores have closed in recent years. Retail is still oversupplied.
“Now we have a major recession ahead of us, but too much of the narrative focuses on the technical definition of a recession.
“Most consumers don’t care. They know what their income is, and they know it’s now falling short of what it used to be, so they need to save. It’s a question of how they do it.” prioritize and how they make those savings.
“A lot of the non-foods we buy are more likely to be bought because we want them than because we need them.
“That’s where the budgeting will take place. It’s going to be a difficult few years as the UK economy shrinks, only to grow again and eventually turn to growth.”
Susannah Streeter, Markets Analyst at Hargreaves Lansdown, said: “The High Street has shown some deep niches of resilience, particularly among retailers that offer value, but as cost-of-living headwinds continue to mount and a recession looms, 2023 will be a very good one be a challenging year.
“Retail sales are still below pre-pandemic levels, and with more money being drained from the economy through tax hikes and higher energy bills, consumers are likely to continue to rein in spending.”
Other commentators struck a more positive tone, suggesting that despite the challenges ahead, the High Street could still have a bright future if it could adapt to changing consumer habits.
Malcolm Pinkerton, Senior Director of Strategic Insights at Kantar, said: “We can expect the High Street to continue to adapt with growing areas such as takeaways, personal services such as salons and hairdressers, and entertainment areas to attract more consumers to The High Street.
Nick Carroll, Category Director of Retail Insights at Mintel, added: “The future of the high street must be built around delivering a ‘multi-mission’ experience – with shopping goals that enable shoppers to achieve multiple goals at the same time.”
And Martyn James, independent consumer champion, said 2023 could be a “tipping point” for the struggling retail sector.
He said: “I can envision former department stores becoming giant franchises, with consumers ordering goods into the store and trying them on with friends while enjoying a glass of wine or lunch.”