DCA members feeling the pinch under the current government
DCA member businesses report having to increase prices as well as seriously switch into ‘survival mode’ trading plans as they struggle to factor in the additional costs imposed on companies in October’s Budget. This coupled with the added impact of growing consumer uncertainty and resultant reduced spending in many categories has triggered many to question whether it is worth continuing to trade.
Some sector businesses with retail store chains are also considering whether it is time to simply roll down the shutters on their shops and revert to selling purely online. Less staff, lower overall overheads, less revenue but potentially a greater opportunity to generate and maintain a profit.
Owners like Lakeland’s Rayner brothers are understood to be seriously looking to find a buyer for the business their father founded. Others like WH Smith’s board are intent on selling off their High Street business in favour of the much more lucrative travel & hospital locations which would enable it to become much more profitable as well as less vulnerable to the demands of government. Some retailers are exiting stores the moment their leases allow them to do so without penalty. Others are intent on struggling on but openly admit to having to make some serious decisions when it comes to jobs, with some expecting to have to lose from 15 – 25 per cent of their employees, simply to be able to ‘balance the books’.
No one can fail to have noticed the number of major retailers announcing that they are axing jobs. Not just on the shop floor either, head offices have been targeted as have board rooms. With expansion plans in most quarters consigned to never-never land, it has become obvious to some that they have been carrying far too much weight than they can realistically afford.
The imminent increase in employers’ National Insurance has already resulted in a widespread recruitment freeze and greater investigation into outsourcing options. It has also put a dampener on plans to near-shore or re-shore manufacturing and any new job creation that may have been spurred by this. Particularly disappointing for those brands which were seriously looking to reduce dependence on the Far East and fly the British Made flag. It is also causing many employers to more deeply examine their teams and ensure that they retain consistently strong leaders and performers rather than those who have consistently undelivered.
Currently though with higher energy costs, a suicidal Net Zero goal, more red tape, rents geared to a time of very much stronger business performance, along with a drop in consumer confidence, the fleecing of and the fleeing of the wealthy, the UK government is not creating an inspiring environment to do business in. And it is retailers who are the first to feel the impact.
The next six to twelve months will be critical for most businesses in retail, or which specialise in providing products and services to retailers. It is no big news that bad debts are already a source of mounting concern to those who depend on retail clients.
High streets and city centres are about to become even more devoid of quality retailers, the threat of unemployment will rise, and consumers will be less predisposed to spend on all but necessities. Sadly those consumers will be even more drawn to buying at rock-bottom prices from the likes of Shein and Temu, which pay no import duties or taxes here, and can therefore undercut any local competition.
A level playing field would be useful Chancellor!
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