Lockdown extension in December would be ‘disastrous’ for retail sector, experts warn
An extension of lockdown restrictions into December would be “disastrous” for the struggling retail sector, which will have already missed out on sales at the beginning of the crucial Christmas trading period.
In a note to clients this morning, broker Peel Hunt said listed retailers had balance sheets strong enough to handle the November lockdown, although experts have warned the month-long forced closure is a “nightmare before Christmas” for the retail sector.
Ministers have refused to rule out an extension to the new restrictions, which will see all non-essential retailers forced to close for the second time this year when lockdown begins on Thursday.
“For the quoted retailers, balance sheets are strong enough to handle November’s lockdown, but any extension into December would be disastrous,” Peel Hunt said.
“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. This isn’t about a Christmas bonanza for these retailers, it’s an opportunity to recruit new customers and gain a permanent uplift in market share and market positioning.”
November usually signals the beginning of the annual “golden trading period”, as around 70 per cent of customers start buying Christmas presents.
West End retailers, which employ one in 10 Londoners, are set to lose £2bn worth of sales during the Christmas period, which usually account for one third of annual sales.
Current trading rates in the central London shopping district are down 64 per cent compared to pre-pandemic levels in 2019, when during the same period, retailers benefited from £2.5bn worth of sales.
Jace Tyrrell, Chief Executive of New West End Company said: “A circuit-breaker lockdown of non-essential travel and retail is a true nightmare before Christmas for West End retailers. I would urge the government to match restrictions with support for British business.
Before the second lockdown was announced, UK retail footfall was expected to be 32.7 per cent less than last year.
However, the latest footfall forecast showed that high street footfall in the six weeks from 22 November to Boxing Day will be down 62 per cent.
According to analysis by Springboard footfall will drop 78 per cent between 5 November and 2 December, with high streets hit hardest with a decline of 87.3 per cent.
Meanwhile 63.5 per cent of Brits intend to spend less this festive season than last year, with many purchases expected to be made online in a double blow for bricks and mortar retail.
Diane Wehrle, insights director at Springboard, said: “The national lockdown restrictions will now see our struggling retailers miss out on the start of essential weeks of Christmas trading, including Black Friday weekend as non-essential retail remains closed until 2 December at the very earliest.”
She added: “Most consumers are likely to have completed a vast amount of shopping online in advance and may well have fears of returning to bricks and mortar stores, however retailers need to be given the opportunity to reopen ahead of Christmas.”