Recently, a government advisor, Professor Neil Ferguson, director of the modelling programme at Imperial College London's MRC centre for global infectious disease analysis, estimated that up to two thirds of people who die from coronavirus in the next nine months are likely to have died this year from other causes. He said that many of those deaths were likely to be old and seriously ill people who would have died from other conditions before the end of the year. What COVID-19 is doing, sadly, is speeding up the end of life and it’s the same for brands and retailers.
Some retailers have started to fall into administration, pointing the finger of blame at the COVID-19 coronavirus. The majority of these brands and retailers were sickly patients to start with. Brands like Beales, Laura Ashley, Carluccio's and BrightHouse were on wobbly ground way before this devastating virus was on the horizon. The coronavirus has just cut short the inevitable. Bournemouth based department store Beales closed earlier than scheduled and left unsecured creditors £17.6m out of pocket.
Left - The Beales flagship store in Bournemouth
Other patients at risk are brands like shopping centre group Intu, struggling under a £4.5bn debt mountain, and who failed to secure new funding before the crisis hit. They’ve also been hit by stores holding back their rent payments recently. Frasers, owner of Jack Wills, has been cutting off vast limbs of its retail network to save their critically ill patient, Cath Kidston is looking for a buyer to save the business and up to 800 jobs and New Look has requested a three-month rent holiday from landlords. H&M has threatened landlords with walking away from 300-plus store leases if sales fail to match pre-coronavirus levels once the pandemic passes. How others like Debenhams and the Arcadia come out of this pandemic is anybody’s guess.
Right - Laura Ashley has fallen into administration
The patient metaphor has one big and important point; the third of previously healthy people who could potentially die. This is where the government efforts to help businesses should be focussed. Those businesses who were previously healthy, but, due to unforeseen circumstances, have been thrown into jeopardy should be given the largest help. Whether it’s down to the sector they are in or the way they sell, these previously healthy retailers should be given the ventilator of loans and payment holidays to give them life.
The longer this crisis goes on the larger that third will become. It is survival of the ones who were the fittest going into all of this.
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News on the grapevine New Look is close to going under. I don’t think this will mean that New Look will disappear, it’ll probably be pre-packed into a slimmer and more nimble retailer while shaking off its debt. It has 600 stores, which seems rather top heavy in this current retail environment.
Ironically, when it’s not cold enough many retailers blame the weather for not shifting clothes, and this week, the whole week, or even two, will be a write off, for the majority of retailers, particularly fashion, because people aren’t leaving the house or simply can’t get to the shops due to the snow and many items there won’t be suitable anyway. Two disruptive weeks could push a few more retailers over that administration edge.
Left - Expect to see more of these and for longer
I think we’re at a tipping point for physical retail, particularly larger shops with big overheads. These gaps are big and aren’t being filled. 102 of the 164 BHS stores that went out of business are still un-let nearly 2 years after its closure. Add in Toy R Us and the announced store closures from many retailers such as Marks & Spencer and Debenhams and you have a very gappy and unattractive grimace to the majority of shopping areas or high-streets.
This downward spiral simply speeds up the death of these areas: fewer shops, means fewer visitors and therefore fewer shops.
Any retailers who sell the same items as Amazon seem to be in trouble and fashion has to acknowledge that the ASOSs and Boohoos of this world have taken a massive chunk of spend and continue to do so.
Fashion retailers are damned if they do and damned if they don’t when it comes to the internet. Even the best website in the world will still eat into physical stores. The bigger and better you make your online offering will only encourage people not to visit your stores. It’s a feeling of struggling to stand still, and, with many cases, going backwards.
I live in Croydon and there’s been talk of a big, new Westfield for a long time. The town centre is very dated and run down and needs the investment and also the ‘Westfield’ name to put it back on the map. But, Westfield has gone very quiet. They’ve kicked the development back to start in 2019, not really sure why, and having just been taken over by a French company it wouldn’t surprise me if they wanted to relook at any new developments.
Croydon is a risk. It isn’t White City. While it has good transport links, it also has many shopping centres close by. I’ve said to people buying into ‘up and coming’ Croydon, not to buy thinking a Westfield is definitely coming. John Lewis was always muted as an anchor tenant and they’ve said they don’t want to open anymore stores ATM. If it does happen, it will affect the Bromley, Kingston, Bluewater and even Brighton shopping centres. The pain will be felt somewhere.
So, what to do? These units are too big. Shops and shopping centres will have to contract. These spaces need redesigning and dividing. What we need is housing and leisure facilities. The future of physical retail will be ‘want’ and not ‘need’. It’ll will be about service and human interaction - Read TheChicGeek's Human Cookies. Online is unbeatable with need, and its dominance will speed up even more with automation and driverless delivery. But, we’ll still want to get out of the house, see what’s new, try and touch things. It’s just unfortunate that some of these larger retailers and their footprints are unsustainable.