Battered high streets face 30,000 job losses in 2017 with more household names set to go under
Household names are at risk of going bust and other big chains are expected to shut hundreds of stores
HIGH streets face 30,000 job losses in 2017 – shops’ worst toll for five years – with household names risking going bust due to price hikes, record online spending and giant discounts.
Some 30,000 retail job losses were forecast in 2017, beating 2016’s total of 26,052 job cuts to be the worst annual jobs toll since 2012’s 48,142, the Centre for Retail Research said.
The first job losses are expected in weeks.
Household names are at risk of going bust, analysts said, while other big chains are expected to shut hundreds of stores to focus on booming internet shopping.
2016 saw BHS fold - with 11,000 jobs lost - along with Austin Reed, Staples and American Apparel.
Struggling Marks & Spencer, which employs 71,000 people, has cut 525 jobs, while staff fear job losses after the Sainsbury’s takeover of Argos.
Wickes owner Travis Perkins plans to axe 600 jobs, under-fire Sports Direct has seen profits slump 57 per cent and Dixons Carphone forecasts tough trading.
Entertainment chain Game, which has more than 3,000 staff, and womenswear retailer Bonmarche, which has 1,900 staff, are battling to recover after profit warnings.
21,802 retailers are in "significant financial distress" - up six per cent on a year ago, insolvency specialists Begbies Traynor said. Most are small or medium businesses.
Almost half of British fashion retailers face going bust or failing by 2019, business advisers Opus Restructuring said.
Retailers are suffering increased supplier prices due to the pound’s slump following the vote to leave the EU. Sterling is down 18 per cent year-on-year against the dollar and 14 per cent against the euro.
Shops - including Dixons Carphone and AO.com - are under pressure to increase prices as a result, which would be likely to dent sales. Next, Lego and Dell have already announced post-Brexit vote price rises.
High street spending is down 85 per cent since Boxing Day’s £2.95billion spree on Monday, collapsing to just £460million yesterday, the Centre for Retail Research said. Footfall is down on last Christmas.
Analysts said giant pre and post-Christmas discounts – up to 86 per cent - wiped out stores’ profit margins.
Professor Joshua Bamfield, director of the Centre for Retail Research, said: “30,000 retail job losses in 2017 would not be surprising, especially if one or two more big retailers go pop.
“2017 will be a worse year than 2016, which saw 26,052 jobs hit and was the worst retail jobs tally since 2012.
“There is no doubt more retailers will go under. Online is eating the high street’s lunch, growing by 10-15 per cent a year and taking a bigger and bigger share of spending each year, while high street spending is down 2 per cent year-on-year.”
A British Retail Consortium spokesperson said: “There will be some retailers for whom the sums don’t add up after the crucial Christmas trading period.
“The 2017 retail environment is likely to be challenging due to cost pressures in the supply chain, as well as pressure from the National Living Wage and business rates impacting on retailer’s bottom lines.”
Julie Palmer, partner and retail expert at Begbies Traynor, said: “Levels of financial distress among retailers are even higher than last year.
“Small businesses are stretched to the limit and are undoubtedly the biggest victims of the increasingly cut-throat UK retail environment.
“Without a strong end to 2016, many smaller retailers may not survive much beyond the January sales.”
Nick Hood, business risk adviser at Opus, said: “The failures of BHS and Austin Reed earlier this year shows the fate that awaits clothing retailers who fail to invest and stay relevant to a constantly changing market.”
Mintel director of retail research Richard Perks said: “Price cuts seen this Christmas undermine retailers. Many retailers have already gone – but more administrations are possible.”