164,000 JOBS FACE AXE IN DISASTER FOR HIGH STREET
Store closures to hit 22,100 as shoppers tighten belts
BRITAIN’S high streets are braced for ‘intense pain’ with tens of thousands of store closures predicted over the next 12 months and job losses estimated to hit 164,000.
The predicted job cuts – roughly equivalent to the population of Oxford – come on top of music and film retailer HMV being forced to appoint administrators after struggling to pay its bills.
Few retailers have escaped t he malaise that has seen shoppers deserting town centres over Christmas and forced online fashion giant Asos to announce a shock profit warning.
Now, in detailed research prepared for The Mail on Sunday, analysts predict the number of job losses in the retail sector, already reeling from a tumultuous 12 months, will rise 19.2 per cent to 164,000 in 2019.
Store closures are expected to hit 22,100, a rise of 19.7 per cent.
Professor Joshua Bamford, from the Centre for Retail Research which prepared the forecasts, said: ‘Consumers have shown over Christmas they are increasingly anxious and have become more careful about spending money.
‘We expect to see a worsening of conditions over the next 12 months, caused by the high costs of running retail stores and continuing weak demand.’ He added that a number of major retail chains are likely to hit the buffers in 2019. ‘Intense pain will also be felt by commercial property owners in cities and retail parks.’
Bamford said store closures would be seen across independent retailers, accounting for about half, and large chains. The gloomy outlook includes anticipated collapses and shops shuttered by retrenching chains such as Marks & Spencer.
Bamford added that the increasingly vitriolic Brexit debate among politicians ‘further undermines consumer confidence and makes shoppers doubt whether anyone is in charge’.
Last year saw the collapse of retailers including House of Fraser, Toys R Us and Maplin. The wave of collapses has left creditors nursing an estimated £2.5 billion in unpaid bills.
Robert Hayton, head of business rates at retail property adviser Altus Group, said last month’s Budget did ‘little or nothing to help major retailers which are reducing their store portfolios and head counts’ to cope with the crisis.
Today the Financial Secretary to the Treasury, Mel Stride, tells The Mail on Sunday that the Government has invested billions in tax cuts for struggling retail- ers and will tax online marketplaces, hitting both Amazon and eBay. But he said the Government cannot be like Canute ‘trying to stop the tide coming in’.
Retailers are also expected to reveal dire Christmas trading figures from this week. Springboard, which tracks visits to shops, said shopper numbers in December have so far fallen 3.6 per cent compared with last year.
High street stalwart Next is set to announce trading figures on Thursday. City brokers are predicting discounts across the sector have blown a £20 million hole in its annual profit.
Marks & Spencer is expected to say same-store sales at its branches fell by around 3 per cent on both food and clothing, City sources said.
Credit rating agency Moody’s said in a report last week the malaise is likely to have affected other high street firms, citing New Look and Debenhams.
‘Music and film re tailer HMV announcing administration is the first – albeit extreme – example of a company that has not enjoyed Christmas,’ said Moody’s vice president and retail analyst David Beadle. He added: ‘Lower sales at thinner [profit] margins means the Christmas trading period will have been difficult for many UK retailers.’
HMV bosses have been working on a plan to bring together a consortium of film industry heavyweights to support the firm and rekindle its fortunes. Discussions between Hollywood firms are expected to continue in the coming days that could lead to a rescue of the chain, which employs 2,000 staff.
However, it looks likely, even if the business is resuscitated, that it may have to close its iconic Oxford Street store where the combined rent and business rates bill is around £4.5 million a year.
HMV chairman Paul McGowan said in a statement on Friday the chain had struggled to withstand the ‘dramatic change’ on the high street over the past 12 months. He said: ‘HMV has clearly not been insulated from the general malaise of the UK high street.’