£7bn blow to Christmas shops
£7bn blow to Christmas shops: Tier 4 lockdown will wipe out huge takings during the festive peak for stores that are already ‘hanging on by a thread’, experts warn
High streets in Tier Four face a £7billion nightmare after having to suddenly pull down the shutters at the busiest time of the year.
The huge sum could be lost in takings for the Christmas week through to the Boxing Day and January sales after new Covid restrictions were imposed.
It is feared thousands of stores ordered to close will never re-open, putting many thousands out of work.
The closure of non-essential shops, gyms, hairdressers, nail bars and department stores in London and the South East at midnight on Saturday after just a few hours’ notice has been a hammer blow.
Cold comfort: Regent St opens to traffic after a shopping frenzy
Meanwhile Wales moved into a Tier Four equivalent yesterday and Scotland announced its own restrictions on Saturday.
Retail analyst Steve Dresser criticised the ‘zero notice’ and warned: ‘It’s sounding the death knell for our industry. End of times.’
Debenhams and Topshop, part of the Arcadia group, already have closing down sales and many others will follow suit.
End of the line: Stragglers at St Pancras station after the mass dash home
Bricks and mortar retailers, including John Lewis and Next, are having to switch the focus of Boxing Day sales online and even bring them forward.
The scale of the lost or delayed sales for physical stores could ‘sadly’ be up to £7billion, suggested Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research.
‘This fortnight is big for Christmas and sale spending with £15billion of Christmas spending next week and £8billion of sale spending the week after,’ he said.
Tale of two cities: How restrictions laid waste to London in 24 hours
‘Some goes to supermarkets, some will go online. And some parts of the country are unaffected. But about £5-7billion will be at least delayed.’
The British Retail Consortium has estimated the loss of sales during a typical lockdown week are up to £2billion. The total for the weeks before and after Christmas would be likely to top £5billion.
Richard Lim, chief executive at analysts Retail Economics, also warned of the effects of Tier Four.
‘Thousands of retailers are hanging on by a thread, hoping to trade through these vital days before Christmas after months of disruption,’ he said.
‘It is essential that adequate government support is provided for an industry already on its knees.
Room for manoeuvre: Passers-by in Oxford St which had been gridlocked
For many shoppers, a last-minute rush to order presents online will come too late as retailers struggle to cope with the volume of orders.
‘Online capacity has already been exceeded for many retailers and a last-gasp attempt for some is likely to push operations beyond their limits.’
The British Independent Retailers Association criticised the closure of non-essential shops as ‘disastrous’.
It called for support for small shopowners who will lose out as consumers rush to supermarkets and the few other stores, such as DIY warehouses, which can remain open.
Oxford Street on Saturday
Chief executive Andrew Goodacre added that ‘closing Covid-secure non-essential shops at this time of year does not deter people from coming out’.
He warned: ‘It only leads to larger crowds in those stores left to trade, giving every opportunity for this virus to spread.’
The British Retail Consortium has been accused by industry insiders of failing to use the rhetoric needed to spell out the true scale of the crisis.
Desolate: Debenhams could have closed for good after a final sale hurrah saturday
After the latest closures, chief executive Helen Dickinson said: ‘This is hugely regrettable news.
‘Retailers have invested hundreds of millions of pounds making stores Covid-secure.
‘The consequences of this decision will be severe. The Government’s stop-start approach is deeply unhelpful.
‘This decision comes only two weeks after the end of the last national lockdown and in the middle of peak trading.
‘Faced with this news and the prospect of losing £2billion per week in sales for the third time this year, many businesses will be in serious difficulty and many thousands of jobs could be at risk.’
Another recession seems inevitable: Former Chancellor NORMAN LAMONT argues that Britain cannot avoid the devastating financial impact of the latest coronavirus lockdown
My heart sank to my boots at the news this weekend that all of London and most of the south-east of England, as well as cities such as Portsmouth and Peterborough, were being plunged with almost immediate effect into the most draconian restriction tier yet.
Be under no illusions. For many tens of thousands of people who have struggled all year to remain solvent – be it in retail, the hospitality sector or as a small business – and for whom a busy Christmas and New Year offered a glimmer of hope, this is the final blow. Bankruptcy will be inevitable. It is an appalling prospect.
Of course, there can be no doubt that the Prime Minister was in an immensely tricky situation.
With Italy, France and other major European economies increasing Covid restrictions over Christmas and New Year, there was always going to be pressure to follow suit.
All the same, I do not envy Chancellor of the Exchequer Rishi Sunak. I know it is a lonely job and he is acquitting himself well, showing nerves of steel in this most difficult of times.
But as long as these new restrictions continue, the simple truth is that there is little the Chancellor can do to stimulate Britain’s economy.
For our recovery to begin in earnest, lockdown will have to be lifted entirely. Until that happens, tax cuts, consumer incentives and all the rest of the weapons in his arsenal are all as good as useless.
He might as well try to make water run uphill. We know that the FTSE 100 has suffered its worst year since the economic crash of 2008.
Now it is inevitable that the fourth quarter of 2020, and probably the first of 2021, will also see negative growth – recession, in layman’s terms.
Until last week, I was hopeful for the New Year. There has been a rising tide of optimism boosted by the start of a vaccination programme – the first in the world – and a growing feeling of confidence that within a few months our economic misery could be behind us.
Certainly, many businesses were bullish about a rush of spending before Christmas.
Millions of people who’d been unable to splash out all year (and who are lucky enough to have retained their jobs) had savings that they were eager to splurge – we all felt we owed ourselves a treat.
Yet those hopes have now been smashed, not just in the UK but in Europe as well.
In fact, the situation is now so dire that holding out for a ‘V-shaped recovery’, as some were, now seems naive – the downward slope is almost vertical, the upward one ragged and shaky at best.
So many restaurants, pubs and shops had poured the last of their resources into obeying the rules on social distancing, with plastic partitions, wider aisles, protective equipment and so on.
But the sudden imposition of Tier Four constrictions has rendered those plans futile, and wasted all that expense.
Meanwhile, the furlough scheme has been extended yet again, to the end of April, and there is no coherent plan to repay the tens of billions it is costing.
All the Chancellor has been able to do is keep signing the cheques. But is that really sustainable?
At the time of the next Budget, he must give some indication of how he plans to stabilise the nation’s finances.
Lord Lamont was Chancellor of the Exchequer from 1990-93
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