400,000 jobs at risk due to high street slowdown

11 February 2021 Consultancy.uk 3 min. read
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The ailing UK retail market could see huge swathes of redundancies throughout 2021, according to a new study. The accelerated shift to ecommerce throughout the coronavirus pandemic has exacerbated the recent decline of the nation’s high street, which could see more than 400,000 jobs lost by the end of the year.

Prior to 2020, the British high street had already been in a state of seemingly terminal decline. Since the global financial crisis, bricks and mortar retail has taken a consistent battering – with retailers Woolworths, media stores Zaavi and HMV, and electrical goods providers Comet and Maplin among the formerly high-profile casualties of the economic turbulence that began with 2007’s infamous credit crunch.

Major brands have been vacating high street presences for years since, a process accelerated by the boom in disruptive ecommerce platforms over the past decade. This seemingly peaked in 2019, when it was revealed that 16 stores closed every day across the UK, with worse expected to come for the sector as Brexit loomed on the horizon.

400,000 jobs at risk due to high street slowdown 2020 saw the situation worsen significantly, however, with the advent of a deadly global pandemic reducing footfall in city centres to zero throughout the year’s key trading periods. With no end in sight for the continuing Covid-19 outbreak, a new study from KPMG has warned of the dire consequences this is likely to have for high street workers.

Analysing 109 cities and towns across England, KPMG found that alongside the reduction in commuter footfall, the accelerated shift to online shopping resulting from the public health crisis is exacerbating the vacuum in city and town centres, with less people calling in to shop. As a result, high streets could lose between 20%-40% of their retail offerings, affecting between 1%-5% of the local workforce and the potential loss of over 400,000 jobs. The impact of more employees continuing to work from home varies across cities and towns.

Yael Selfin, Chief Economist at KPMG UK, said, “As people travel less for work or to shop, town and city centres will need alternative offerings to fill vacant space and to attract people to the area as we hopefully leave the pandemic behind sometime this year. High streets will need to be reimagined as cultural and recreational hubs that will act as magnets for businesses and jobs able to transform less prosperous areas.”

KPMG’s study also calculated an index of vulnerability for towns and cities in England based on assessment of the impact of home working and loss of retail outlets, combined with the strength of current cultural assets. While cities like London, Liverpool, Birmingham and Manchester benefit from strong cultural offerings which can offset the financial hit in this way, other population centres are not so fortunate. According to KPMG, locales like Warrington and Basingstoke will be hit harder by the loss of commuter footfall and retail offering, as they will find it more difficult to attract people to their centres by other means.

Finding new avenues of creativity will be key for such locations to weather the coming storm. Chris Hearld, Head of Regions at KPMG UK, explained that cities should take this moment to find the help and space to rethink the purpose of their centres.

Hearld added, “Fostering collaboration between businesses and local policymakers can help rethink the journey to work with a focus on lower carbon, more customer-orientated and better-connected transport networks, and it will be important to prioritise investment in high-speed broadband and 5G connectivity.”

Across the EU, the UK high street was found to have been the worst hit in 2020, with a survey of Eurozone markets showing that British retail sales remained significantly below their pre-crisis level in the autumn. Throughout the year, falling consumer spending power and social distancing measures led to a huge number of British retailers having to close business completely.