I was walking the hound this morning which involves crossing a major road near me, which used to have numerous shops on it. You can tell by the facades that even though they are now flats they all used to be shops, now there is only one newsagent left. It made me think about the latest rebound in UK GDP figures, and whether it will last? The latest lockdown strongly suggests it won’t, the economy is bound to take another hit and for one sector in particular this lockdown will be much worse.
Many years ago I persuaded the manager of a huge department store on Oxford Street to talk about the run up to Xmas. One thing really surprised me; the store made well over 50% of its profits in November and December, it may have been as high as 75%, it was a long time ago. The January sales also brought in quite a bit of money but as the manager told me, that meant the shop was making a loss for 9 months of the year.
Which is why the retail sector is so anxious about this new lockdown. Although the last one was tough, at least it didn’t cover the most and possibly only profitable time of the year, like this one does. It is not only High Street department stores that are suffering of course, just think about perfume sales, the books that you normally buy as presents, the pop up wrapping paper shops and a dozen more. Toy shop owners must be close to despair and a lot of the damage will not just be seasonal. We are still spending money but more and more of it online, we are visiting town centres much less and avoiding the High Street. I doubt we will return in the same numbers when this is over.
This second lockdown is therefore going to be devastating for many shops and if I was setting up a business today it wouldn’t be in retail, it would be one specialising in converting even more shops into flats.