Toy chain Hawkin’s Bazaar has become the latest retailer to collapse into administration, putting nearly 200 high street jobs at risk.
The Norwich-based chain has suspended its website but its 20 stores, which are already running clearance sales, remain open. Gift cards will only be accepted for a limited time after administrators were appointed.
Tom Straw, a partner at the administrators, Moorfields Advisory, said it had been a challenging Christmas for the toy trade. The small business, which employs 177 people, has struggled to compete with Amazon and others.
What’s the problem?
Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as the coronavirus pandemic. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result.
In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores.
At the same time, there is a move away from buying "stuff" as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit and the coronavirus, have coincided with economic and political uncertainty that has dampened consumer confidence.
What help do retailers need?
Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. Many businesses which deal with complex supply chains also want additional help with the new red tape and import charges imposed after Boris Johnson's Brexit deal saddled them with extra costs.
What is the government doing?
In the December 2019 Queen's speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m "future high streets fund" under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.
Straw said: “Hawkin’s Bazaar is a retail brand with a strong heritage both on the high street and online. Unfortunately, despite making changes to appeal to the shift in modern buying patterns, the retailer still struggled to compete with online retailers such as Amazon.”
Earlier this month, Argos said the absence of a must-have game or gadget had contributed to a slump in toy and video games sales at Christmas. A disappointing festive period capped a difficult year for the toy trade, with UK sales down 6% in 2019. This came on top of a similar decline in 2018, according to the analysts NPD. A total of 337m toys with a value of £3.2bn were sold in the UK during 2019, it said.
It is not the first time Hawkin’s Bazaar has had financial problems. It also went into administration in 2011, a situation that resulted in the closure of two-thirds of store network. In 2016 the retailer was acquired by Merino Private Equity but it was put up for sale again last summer. The most recent accounts show a near-£1m loss on sales of £15.3m in 2018.
Hawkin’s Bazaar’s challenging Christmas period reflected the struggling high street retail sector generally. Although the company is in administration, its stores will continue trading until further notice and much of the stock will be subject to clearance discounts and other special promotions.
