Retailers brace themselves for a nightmare before Christmas

A second lockdown was not on British shopkeepers' lists to Santa

Camden Town
High streets, such as Camden Town in London, were deserted during lockdown earlier this year Credit:  Dominic Lipinski/PA

Mike Turner, who runs Bird & Blend, a tea seller based in Brighton, can probably count himself lucky. 

“We're very fortunate that we're in a strong position, split between stores and online,” says the 32-year-old entrepreneur. “[We are] large enough that we can keep up with the constant changes pushed on us, and small enough that we can be agile and change direction as needed, but I feel for all those who aren't in such a good position.”

Even so, Turner and his co-founder Krisi Smith risk higher bills and too much extra stock as they shut their 10 shops for a month from Thursday. In preparation for Christmas, the pair stocked up on seasonal tea and blends to meet the usual festive demand. 

“We’ve now obviously had more than half of the busiest trading period of the year shut. The period when really our business makes its money for the year,” Turner says. 

Bird & Blend is among at least 362,855 non-essential retail sites that are being forced to close to help curb the spread of Covid-19. As an industry, the most devastating factor is the timing of the new restrictions. 

“Even before this second national lockdown, some dead retailers remained trading as high street zombies,” says Richard Hyman, an independent retail analyst. “Their number will undoubtedly grow.”

Hyman estimates that even if all shops reopen in December, non-essential retailers will have lost around £23bn from both lockdowns. 

Visits to stores are expected to fall by almost two thirds from Nov 22 to Boxing Day compared with last year, according to new data from Springboard. The figures are a significant change to the original forecast of a 32.7pc slump in the light of the Government’s rushed announcement on Saturday evening

Between Nov 5 and 2 Dec, when restrictions are meant to be lifted, footfall across England is set to decline by 78.8pc, with high streets hit hardest. 

This lays bare the challenges that retailers face after months of hibernation during summer, and the subsequent disruption to their warehouses to adhere to social distancing measures while coping with a spike in orders.

John Stevenson and Jonathan Pritchard at broker Peel Hunt say: “For the quoted retailers, balance sheets are strong enough to handle November’s lockdown, but any extension into December would be disastrous. 

“November payday, Black Friday and cyber Monday will all occur in lockdown, the normal starting gun for peak trading. In essence, the pureplays and essential retailers will get a clear run at the consumer for peak trading,” they added. 

There is still some debate about which firms will be fully open. The likes of Dunelm, discounter B&M, B&Q’s DIY sheds and Pets at Home are likely to do well. 

The collapse in non-essential spending is also likely to be less dramatic the second time around as Britons stockpile less and still buy Christmas presents, albeit perhaps not as many as they would otherwise have bought. Meanwhile, services such as click-and-collect could allow clothing and home retailers such as John Lewis and Marks & Spencer to stay open and avoid sitting on mountains of unsold goods come spring.  

But Hyman warns: “Retailers will be carrying stocks into 2021 on a scale never before seen. Turning that into cash will be critical. And getting price, channel and store allocations, and promotions right will be essential pre-requisites of survival.”