This Is The Retail Apocalypse, Hope To See You On The Other Side

The headlines at times have seemed unrelenting, a constant stream of depressing news which at times has threatened to break the resolve of even the most hardened of us. To what am I referring? Death of the high street, the retail apocalypse, administrations, going bust, closing down sale, you name it, we’ve seen it.

And for regular readers, you will know that I have long resisted this narrative, after all, retail is undergoing a transformation, out with the old and in with the new. Legacy retail making way for the new, vibrant kids on the block. And for that reason alone, we should rejoice.

After all, aren’t all retailers battling the multiple threats of Brexit (remember that?), the weather, rising costs, online and depressed consumer confidence? Same for everyone so how come some are struggling while others seemingly thriving?

But that was then. Because, thanks to something none of us ever anticipated, everything which we once held to be true, everything which we once understood to be the world order, has been turned upside down and inside out.

If we hadn’t already been brave enough to throw away the old rule book, then the Covid-19 coronavirus has surely not only grabbed it from our hands but thrown it out of sight.

And with it, that narrative has become a reality almost overnight, because if you didn’t believe it, be under no illusion that the retail apocalypse has suddenly been ushered in with alarming speed and ferocity.

For 12 years I’ve argued that talk of a retail apocalypse was doom mongering nonsense. The advent of coronavirus, I’m sorry to say, makes the retail apocalypse a reality

Retail faces a crisis, the like of which was not only unexpected but for which it is clearly unprepared to deal with. It is a sad and stark reality that for small independent retailers and large chains alike, against a backdrop of falling sales and rising costs, the shock to the economy which the coronavirus is bringing, could spell the end for many.

For many retail businesses which have long been walking a tightrope between solvency and going bust, this won’t just nudge them over the edge, it threatens to shove them into oblivion.

Intu the property company which owns the likes of the Trafford Centre and Lakeside, and with assets of £6.3 billion, has just reported a £2 billion loss and warns that it could go bust.

WH Smith has issued a stark profit warning as its travel business goes through the floor, saying that pre-tax profits for the year to August 31 will be £30 to £40 million down on estimates, while revenues will take a hit of up to £130 million for the same period.

Cineworld, the world’s second largest cinema operator has said that a worst case scenario of having to close all its cinemas for up to three months could spell the end for the business.

This is unprecedented.

And on the day when President Trump announced that all flights from Europe to the U.S. would be suspended, we are all faced with a new normal. One that on the face of it is unpalatable in the extreme. That all we’ve held dear, all we’ve understood to be strong and stable about our economy, is as stable as a house of cards.

Another Nail In The Coffin

In the U.K. at least, there was a glimmer of hope as the Chancellor, Rishi Sunak, delivered the budget speech in the House of Commons, promising a £30 billion package to support business.

The Chancellor has failed to provide any relief for larger retailers, who employ the majority of the industry’s three million workers and currently foot most of the industry’s £7.5 billion business rates bill

And whereas, pulling rabbits out of a hat is normally the preserve of magicians, on the face of it, something for retailers to cheer about. But how do you help support a business when it doesn’t have any customers? If a fifth of us, as is expected at any one time, will be at home self-isolating, we won’t be visiting retail, restaurants, bars, cinemas, gyms and so on, even if they are open.

It was always going to be the coronavirus budget and after years of austerity, it felt rather like having a cold, limp pizza pushed under our noses. More than that, just when retail needed it, the opportunity was missed to reduce the burden of an unfair and crippling system of business rate taxation. And that won’t be considered until at least the autumn, which is likely to be too late for many.

Budget message for retailers: if we’ve been ignoring you, this will continue until at least the autumn, maybe longer if we can find a way to hoof the ball into even longer grass.

Perhaps this is the reset which the consumer economy needed. After all, we’ve long reached peak stuff, we’ve raped and pillaged the environment for decades, all in the name of the consumer. And we’ve come to disrespect our planet in an alarming fashion.

The shock to the economy will be temporary, of that there is no doubt. And there is always the argument that good retailers don’t become bad retailers overnight. But just like mission control when the Apollo astronauts disappeared around the dark side of the moon, we will await with baited breath to see just who will emerge on the other side.