The Crisis in Retailing: Closures and Job Losses

The Crisis in Retailing: Closures and Job Losses

Why Is It So Bad for Shop Retailers?

The reasons for the issues facing retailers with physical shops are discussed extensively in The Retail Research’s Report Retail At Bay. The key issues identified include:

  • “The high costs of running retail outlets, including rents, business rates and high labour costs;
  • Low profitability caused by high costs, slow growth in sales, squeezed profit margins and heavy price competition;
  • The rapid growth of online competition such that by 2018 online sales accounted for around 18.4% of total retail merchandise sales, with much of online growth achieved at the expense of bricks-and-mortar retailers.
  • Lack of preparation: low investment in stores and weak forward planning to meet the challenges of the new retailing.”

“Coronavirus Lockdown. Trumping all the above have been the effects of lockdown, which has deprived the majority of stores of their normal revenues (though online business has rocketed, but not by enough for most retailers). To be closed for three months has deprived most non-food businesses of two-thirds or more of their income at one of the best times of the year, but fixed costs like rent still have to be paid. The furlough system has been helpful, but no more than that. Food stores, pharmacies and supermarkets have seen plenty of business, but the costs of social distancing have considerably depressed their profits.”

Read the full article here  

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