Fashion chains’ owner cuts hundreds of high street jobs
Online shopping, rising business rates and changing consumer habits have ravaged retailers across the land. Ben Woods reports from Swansea on how traders are learning to adapt
THE owner of high street fashion chains Monsoon and Accessorize scrapped hundreds of jobs last year as it shuttered stores in a desperate bid to get back into the black.
Drillgreat Limited’s headcount plunged 12pc to 2,737 in the year to Aug 26, 2017 as it closed 18 UK stores and geared up to shut more this year, Companies House records show.
The retailer, still majority owned by Peter Simon, its founder, said it had seen an acceleration in the number of shoppers buying online instead of going at shops. The high street environment was “probably the most difficult in Monsoon’s 45-year history”, it said.
The axe fell hardest on the two chains’ stores, where more than 250
‘In common with all of our high street competitors we are witnessing a steady decline in footfall’
jobs were scrapped, but it also cut 100 administration roles.
The cutbacks helped the chain improve its profitability but it still chalked up a pre-tax loss of £10.5m, down from £18m the year before. Revenues were broadly flat at £424m.
“In common with all of our high street competitors we are witnessing a steady decline in footfall and like-forlike sales [in the UK],” the retailer said, adding that an uptick in online sales was failing to offset declines in stores.
The retailer announced two years ago that it would close 141 stores over five years as part of the plan by Paul Allen, the chief executive, to phase out dual-branded shops introduced by John Browett, his predecessor.
Drillgreat said it expected that the retail climate would “continue to prove challenging” as the shift to online, weak consumer demand and economic uncertainty continue to weigh on sales.
When Juliet Luporini was a little girl she would watch customers queue outside her parents’ restaurant until closing time. It was the Seventies, and Swansea’s high street was awash with shoppers. Today, The Kardomah restaurant – her prized family business – has a loyal following, but trading is not what it was.
“I remember the days when Swansea was packed,” Luporini says. “But we are having to adjust what we do now because we can’t open for as long in the day any more. It just isn’t worth our while.”
The high street of Wales’s second city is suffering. The rate of empty stores is 17pc, a good 6pc above the national average, and the situation is likely to get worse before it gets better.
Online shopping and changing consumer habits have ravaged the business models of some bricks-andmortar retailers. Cost pressures from steep rents, rising business rates, and hikes to the national living wage have eroded margins. A bout of low consumer confidence has only sought to darken the skies above the nation’s beleaguered high streets.
Such has been the pressure that a number of high street stalwarts have been wheeled into the casualty ward.
Maplin and Toys R Us have collapsed. New Look, Carpetright and Mothercare have been pulled back from the brink, but not without considerable pain for the towns and cities that they occupy. These retailers have secured a lifeline known as a company voluntary arrangement (CVA). The insolvency process helps businesses escape a precarious financial position by shutting underperforming sites and securing deep rent cuts.
High streets in Swansea, Doncaster and Ipswich are expected to be hit the hardest by this spate of retail distress, according to the Local Data Company. The Welsh city alone has eight stores that have either been closed or face an uncertain future following the latest restructuring wave. But while the situation in Swansea may be tough, it is not unique. Nearly one in 10 town centre shops across the country are empty, while March and April figures recorded the biggest national drop in footfall since 2009, according to the Brc-springboard’s monthly tracker.
If Napoleon were alive today, would he still brand the United Kingdom a “nation of shopkeepers”? Of those that are fighting on, many have an axe to grind.
Paul Davies, who runs the urban fashion store NV-US near the Swansea train station, is clear where he thinks the blame lies. The 48-year-old says the troubles on the high street are being exacerbated by government and landlords. “If I employed someone, I wouldn’t be able to pay them a wage today,” Davies says. “In fact, I can’t afford to pay myself sometimes.
“There are so many empty units and most of them are owned by property landlords who are out of town, or in London. They don’t know what it is like. People can’t spend as much here because the wages are much lower.” Independent retailers in Swansea say some local landlords have a better grasp of the challenges the city is facing, and have set rents accordingly.
London-based landlords, and properties owned by international trusts, have been criticised heavily. Some retailers claim they treat Swansea “like any other high street”, and are not sensitive to the city’s economic situation.
Local authorities can also suffer a disconnect to the high streets’ detriment. Councils hoping to attract new retailers may be desperate for landlords to overhaul their tired looking stores, but convincing them to
‘There is also a cultural change. There’s no shame in having a Primark bag rather than an M&S one’
do so is not always easy. In depressed areas where rents are low, it may not make financial sense for a landlord to plough funds into a full-blown revamp if they are unlikely to see a decent return on their investment.
Instead the shops sit dilapidated and empty. Given the pressure rents can place on retailers’ margins, it is unsurprising landlords are targeted by businesses trying to survive.
Business rates have also been in sharp focus. The Government has drawn fire for last year’s business rate revaluation, which has landed some retailers with crippling hikes to their bills. The tax on property value is a particular sore point because it lumps high street retailers with a significantly higher tax bill than online-focused businesses with little or no stores.
For Davies, a reprieve from business rate charges would go a long way to reviving Swansea’s situation. His previous business in the city, a skateboard shop called Screwloose, was tipped over the edge in 2007 when he could no longer afford to pay a £45,000 annual bill for business rates and rents.
While the Government offers measures that provide firms with business rates relief, there is little hope of a hefty cut across the board. Business rates counted for around £30bn of the £752bn raked into the Government’s coffers, according to the latest figures from the Office for Budget Responsibility.
However, to assume that cost pressures are the root of all the high street’s woes would be naive.
Shopping habits are changing at such a rate that the high street is struggling to keep step.
Amazon may have become a byword for sector disruption for many industries, but there is no denying how its services have reshaped what shoppers want from retail. Its huge breadth of products and super-fast delivery service have shifted shoppers’ expectations to such an extent that inconvenience is no longer tolerated. Amazon’s phenomenal rise is certainly not lost on Swansea. The US tech giant has emerged as one of the city’s biggest employers. Its 800,000 sq ft fulfilment centre – the size of 11 football pitches – is home to around 1,500 staff. David Tyler, the chairman of supermarket Sainsbury’s and the landlord Hammerson, accepts that the internet may be the driving force behind the changing face of retail, but believes the revolution is two-fold. Shoppers’ insatiable appetite for bargains has also played a part in squeezing some retail chains on the high street. “Firstly, consumers are being offered a number of new digitally driven choices, which can give them a range of products and services with a short delivery time – none of which were available five years ago,” Tyler says. “Secondly, lifestyles are changing with today’s dual income, busy families opting for convenience and service as well as value for money. We have therefore moved into an ‘adapt or die’ era.” One of the rising stars of the bargain boom is discount retailer B&M. The business is not afraid of the challenges on the high street and has been launching bricks-andstores at a rapid rate. Chief executive Simon Arora says the retailer’s push into Swansea has been met with enthusiasm from shoppers. “The British consumer is seeing some pressure and wants to save money,” he says. “But there is also a cultural change. There is now no shame in having a Primark bag in your hand rather than an M&S one.” B&M’S second store at Parc Tawe retail park was profitable from day one and hauls in 8,000 shoppers a week without advertising.
The company’s success suggests that, with the right offer, retailers can still bring customers through.
But what does this mean for Swansea? Will it only be the discounters and smattering of other
Juliet Luporini, in Swansea’s struggling Oxford Street