What is the first story you need to know about in 2021?
That is, that as ghastly and universally awful 2020 was, 2021 could in certain subjective ways, actually be worse.
Not many will acknowledge such thoughts as there’s a primitive part of our collective conscience that assumes that if we say something then it has more chance of becoming real.
But the latest report from the Centre for Retail Research (CRR) spells out that this scenario was a probability for the already beleaguered retail and hospitality sectors.
Retail
In “The Crisis in Retailing: Closures and Job Losses” – the CRR reports that 177,000 retail positions were lost in 2020 and predict that they expect a further 200,000 to go in 2021.
These losses, equivalent to 3,400 every week last year, illustrate what a dramatic and permanent impact the Covid-19 pandemic has had on the retail and high street landscape of the country.
They are up nearly 25% on the 143,100 positions lost in 2019.
Some 15,700 stores closed their doors permanently with many big names such as Debenhams and brands like Topshop and Miss Selfridge in the Arcadia group making up the majority although thousands of independent traders have also ended their retail existences.
Director of the CRR Professor Joshua Bamfield said: “Our forecast is based upon a number of factors such as the cumulative effects of months of closure and its impact upon cashflow and rent arrears that will be payable when the moratorium ends.
“The longer-term effects of the greater use by shoppers of all kinds of online retailing is likely to be hugely damaging for physical stores.”
The research showed that in 2020 half of the employees that worked for retailers that went bust, lost their jobs. This is a larger proportion than the 2008 recession when the figure was approximately a third.
Even when a company is able to be rescued and is restructured through a CVA or other insolvency procedure, physical stores may still have to close as part of the deal if they aren’t included in the buyers strategy for the business going ahead.
While analysts, customers and companies alike look ahead to the wide deployment of various vaccines to overcome the virus and return activity to pre-Covid levels, the obstacles to trade in the meantime mean that these might come too late for a lot of retail businesses.
The various and ongoing tiers and restrictions mean that “non-essential” stores are completely closed in Scotland, Wales and Northern Ireland as well as two-thirds of stores in England.
Lost Christmas sales along with the end of some government emergency support such as the business rates holiday means that some companies will start the new year, incredibly, facing tougher decisions and circumstances than they did in 2020.
Restaurants and hospitality
It was a bad year for hospitality industry staff with nearly 29,684 jobs losts from fine dining to large multiple casual-dining chains – an increase in redundancies of 163%.
This is a huge rise from the 11,280 positions lost in 2019 as a result of national and local lockdown restrictions, curfews, changes to service rules and now local tier restrictions.
Hospitality branch closures have also increased by 76% to 1,621 from 922 in 2019.
According to the latest figures taken on New Year’s Eve, 22,082 restaurants are in tier 4 and are closed except for takeaways. There are 4,946 in tier 3 with only the five restaurants in the Isles of Scilly remaining open for regular diners.
Professor Joshua Bamfield, Director of the CRR, said that the findings confirmed that the pandemic had accelerated a major sector shake-up that was already underway.
“The sector experienced rapid growth in outlets from 2014 to 2017 as successful chains added additional branches, but they frequently paid too much, while maintaining quality standards proved difficult.
“The need to cut costs caused by over-expansion, increased competition and weak consumer demand produced a crisis in the industry before the pandemic arrived.”
Start 2021 strong
The very thought that 2021 might be in some ways even more difficult than 2020 is bad just in itself.
But inaction, especially when there’s a chance to help your business, might be worse.
Right now there are a lot of advantages for a business if it looks to restructure or make essential changes to ensure that when the vaccine and public freedoms return, they’ll be there with the lights on and doors open to welcome them and take advantage.
Get in touch with us at your earliest opportunity and we’ll arrange a free consultation for you about what you can do to strengthen your business.
2021 might get worse before it gets better but it doesn’t have to – it can start great and end even greater – but only if you act while you have the chance.