Sarah Butler and Kalyeena Makortoff 

Fears grow for UK high street as more than 6,000 retail jobs cut in a day

Harrods and Arcadia shed 1,200 jobs as John Lewis warns of staff and bonus cuts
  
  

Coronavirus safety sign inside Harrods in Knightsbridge, London
Harrods says ‘necessary social distancing requirements to protect employees and customers is having a huge impact on ability to trade’. Photograph: Hollie Adams/Getty Images

More than 6,000 retail jobs were cut from the UK high street on Wednesday as the full impact of the pandemic on the high street – combined with the wind-down of the government furlough scheme – starts to emerge.

The latest job losses – from retailers ranging from Harrods to Philip Green’s Arcadia group and SSP, the company behind hundreds of railway and airport eateries – bring the total cuts announced this week to more than 10,000.

New data showed the number of shops that have collapsed into administration in the first six months of 2020 is already more than the number that failed in the whole of 2019.

On Wednesday John Lewis confirmed it would not reopen some of its department stores that closed because of the lockdown. In a letter to staff, the group’s chairman, Sharon White, said it would close a number of stores and one London office, and was unlikely to pay its annual staff bonus next year. The annual payout – which is the same percentage for everyone from the chairman to Saturday shelf stackers – is regarded as a key part of the employee-owned group’s culture.

The shops likely to close were not named but industry insiders said those being considered for closure included Watford, Newcastle and Newbury. John Lewis said details would be shared with staff by the middle of July.

According to the data collected by the Centre for Retail Research, 2,123 stores operated by 38 large- and medium-sized retailers fell into administration in the first six months of this year. They employed 49,200 staff.

Some 2,051 stores operated by 43 such retailers, with 45,500 employees, went into administration in the whole of 2019.

While not all the jobs will disappear, because parts of many businesses are rescued by a new owner, the figures indicate the seriousness of the blow to high streets from weeks of enforced store closures to curb the spread of the coronavirus.

On Wednesday SSP, the owner of Upper Crust and Caffè Ritazza, said it would axe 5,000 jobs out of its 9,000 UK workforce, after suffering heavy losses during the lockdown. The company, which operates around the world, said its cuts were in the UK because the economy and travel industry had been slower to bounce back from the pandemic.

“The reality is that passenger numbers still remain at very low levels,” SSP said. UK rail passenger numbers are 85% lower year on year, while UK air travel has been largely non-existent, it added.

Harrods told its staff that one in seven of its 4,800 employees would be affected by job cuts arising from the “ongoing impacts” of the pandemic.

In a note to Harrods staff, the chief executive, Michael Ward, blamed the cuts on social distancing and a lack of tourists. “The necessary social distancing requirements to protect employees and customers is having a huge impact on our ability to trade, while the devastation in international travel has meant we have lost key customers coming to our store and frontline operations,” he said.

Jobs in parts of the store that remain closed, including beauty services and cafes, are expected to be among those to go.

Arcadia, Sir Philip Green’s troubled fashion group – which owns Topshop, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis – said 500 head office jobs out of 2,500 would go in the coming weeks.

Further job losses, particularly in retail and hospitality, are expected as the government winds down its furlough scheme.

From the beginning of next month employers must start to contribute towards the cost of the furlough scheme, which has supported more than 9 million workers with 80% of their salaries, up to £2,500 per month, through the lockdown.

In the first month employers will have to pay only pension contributions and national insurance, but by October they will also have to pay 20% of staff wages.

On Tuesday the prime minister, Boris Johnson, acknowledged that many jobs that existed before the pandemic would soon disappear and that his government planned to “deliver jobs, jobs, jobs”.

The Bank of England has warned the UK is at risk of returning to the high unemployment levels of the 1980s and the chancellor, Rishi Sunak, is expected to set out substantial jobs creation plans in his summer statement next week to help offset the growing wave of redundancies.

The collapse of shirt maker TM Lewin and the Harveys furniture chain on Tuesday has added another 800 job losses and put a further 1,300 at risk.

Other retailers to have failed in recent weeks include the department store Debenhams and the fashion retailers Cath Kidston, Laura Ashley, Go Outdoors, Monsoon, Oasis and Warehouse.

There are also widespread store closures planned by high street names including Marks & Spencer, Next, New Look and the owner of jeweller H Samuel.

On Thursday, creditors to Poundstretcher will vote on a rescue deal under which more than 250 outlets could close affecting more than 2,000 jobs if landlords do not agree to swingeing rent cuts.

Many retail firms were already weak at the dawn of 2020, as rising costs combined with low consumer confidence and a switch to online shopping, which has required expensive investment in home delivery networks. But weeks of enforced closure during the pandemic have been the nail in the coffin for many brands.

White had warned previously the group might not reopen all of its stores. She confirmed the plans in the letter to staff, first reported by the Evening Standard.

The group, which also owns the Waitrose chain, has reopened 22 of its 50 department stores since non-essential retailers were given the green light to restart trading on 15 June. Plans to open a further 10 were announced on Wednesday, including in Oxford Street in London on 16 July.

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In the letter, White said: “The difficult reality is that we have too much store space for the way people want to shop now. As difficult as it is, we now know that it is highly unlikely that we will reopen all our John Lewis stores. Regrettably, it is likely that there will implications for some jobs.”

 

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