Why shop closures in Tier 4 areas are ‘catastrophic’ for retailers

Retailers and analysts agree: shutting shops so close to Christmas will have a devastating impact on the sector

Pedestrians on an empty Carnaby Street on Monday morning
Pedestrians on an empty Carnaby Street on Monday morning Credit: Bloomberg

The run-up to Christmas typically finds London’s shopping districts at their most bustling, with the lights strung over Regent Street and other main arteries twinkling down onto throngs of last-minute Christmas shoppers - some of whom will have held out for bargains, others out to soak up the festive atmosphere.

But this week, those lights are twinkling onto empty streets. On Saturday afternoon, Prime Minister Boris Johnson announced a new tier of more severe restrictions in response to a highly infectious mutation of Covid-19. Sixteen million people in London, the South East and the East of England were advised that they would fall under Tier 4 restrictions from midnight Sunday, giving shoppers and non-essential shops only hours to prepare for the unexpected closures.

“It was just an incredibly huge blow and a big shock because it was so sudden. We’re all a bit numb and feeling a bit like, ‘Oh my God, is this actually happening again?’” says Saskia Lamche, owner of Diverse, an independent boutique in London’s Tufnell Park. Usually December would find her ringing up about a fifth of her annual sales of Ganni dresses, APC handbags and VEJA trainers. 

“It’s such a special time of year in retail and such an important part of our calendar. To have to be shut when we were really looking forward to catching up on lost trading for the rest of the year, and to have no idea when we’re reopening, is pretty devastating.”  

The fact that the new restrictions landed just two weeks after the end of the most recent lockdown ended will only magnify their effects. Many shop owners and executives seemed optimistic that the strength of sales since the 2nd December reopening might help them recoup losses, but closing again so soon, and during the crucial five days before Christmas, represents a devastating blow.  

“The consequences of this decision will be severe,” says Helen Dickinson OBE, chief executive of the British Retail Consortium. “For businesses, the government’s stop-start approach is deeply unhelpful – this decision comes only two weeks after the end of the last national lockdown and right in the middle of peak trading which so many are depending on to power their recovery.” 

Retailers will have stocked up with 22 days worth of pre-Christmas goods and are now facing the prospect of not only being shut for the busiest retail week of the year, but for the lucrative Boxing Day sales. 

“This lockdown comes at a critical time for the fashion industry as we are usually receiving new stock now,” says Anna Park, owner of Anna boutiques. While her five shops in Norfolk, Suffolk and Essex remain open, she has closed her Primrose Hill boutique. “One forgets that our stock is ‘perishable’, what hasn’t sold will now not sell.”

Companies work hard to accurately forecast stock and customer spending, but this Christmas brands have been in a difficult position: overproduce and the unsold inventory could ruin them; make too little, and they lose their one chance for profit in the next six months. Believing the country was opening up after the November lockdown, many opted for the former and are now paying the price.

“Businesses have bought stock to cover much-needed sales during the week where the profits made are crucial to the running of their business in the quieter months at the start of the year,” says Tamara Cincik, the CEO of think-tank Fashion Roundtable. 

“These businesses are now either shut, relying on an overloaded postal service for delivery, or on the less profitable click and collect option which doesn't work for any retailer with no online shop, or any consumer who is not tech-savvy or who just likes to browse in-store. What are they going to do in January with a glut of festive-wear and -wares? Business is all about planning and you cannot plan effectively if you are being told one thing at midweek and another on Saturday and forced to close on Sunday.”

The BRC’s Dickinson agreed. “Faced with this news – and the prospect of losing £2bn per week in sales for the third time this year – many businesses will be in serious difficulty and many thousands of jobs could be at risk.”

Burlington Arcade in central London on Sunday Credit: PA

The pandemic has already shown just how dependent central London has been on international visitors, with profits in the area expected to hit a relatively paltry £2 billion this year in comparison to £10 billion in 2019. Retailers on Oxford Street and Regent Street - where most of Britain’s high street brands have their flagships - will have adjusted their expectations for a Christmas without visitors, but footfall was still high on Saturday ahead of the late afternoon announcement. 

Which is why Jace Tyrrell, the chief executive of the New West End Company that represents central London traders, called Saturday’s U-turn, “catastrophic for businesses” and argued that implementing a lockdown mid-way through the busiest shopping weekend of the year was hugely damaging.  

“After a bleak November, moving London into Tier 4 just before Christmas is another major blow for retail," he says. "London’s West End and its businesses have worked tirelessly and invested millions to promote social distancing and public safety, regularly refreshing protective measures such as hygiene hubs and clear street markings but after a series of stop start measures, trading has been almost impossible.”

A challenging time for retailers is also a challenging time for shoppers. With most online retailers closing Christmas orders before the Prime Minister’s announcement on Saturday, many shoppers have no choice but to scramble for click-and-collect slots at participating retailers. And retailers that remain open have reported heightened demand.

Police officers on horseback rode down New Bond Street last week Credit: AP

Marks & Spencer, which kept its stores open through both previous lockdowns, has introduced “Pay With Me”. This on-the-spot payment solution lets shoppers buying only a few items check out with staffers equipped with handheld payment devices, mitigating queuing times and crowding in shops.

But in a quarter that has already seen the demise of Arcadia and Debenhams, it seems inevitable that this lost week of trading will have consequences. Two months ago, Andrew Phipps - the head of retail for Cushman & Wakefield - argued that the fashion industry was praying for a successful festive season. “Well, let’s just say there is a lot riding on Christmas,” he said in October. “If we don't visit the shops we like this December, they won't exist by Easter.”

Independent shops are adapting to the best of their abilities. Lamche, the Diverse owner, is offering daily collection hours, gifting advice by phone and a local drop-off service. Still, she wonders: “The rent doesn’t go anywhere. How much more tolerance has any business got in it? What’s the breaking point? Right now, we’re bending very heavily - we haven’t broken yet.”