Next stops online shopping amid UK coronavirus restrictions
Next said it had taken the “difficult decision” to close its website as the coronavirus shutdown threatens to wipe more than £11bn off fashion sales this year.
With all high street clothing specialists forced to close their doors this week, analysts at GlobalData think the amount that Britons will spend on clothes and shoes will tumble by 20% – or £11.1bn – in 2020. That is a fall equivalent to the combined annual clothing sales of the three market leaders Primark, Marks & Spencer and Next.
UK lockdown: what are the coronavirus restrictions?
People in the UK will only be allowed to leave their home for the following purposes:
- Shopping for basic necessities, as infrequently as possible
- One form of exercise a day – for example a run, walk, or cycle – alone or with members of your household
- Any medical need, to provide care or to help a vulnerable person
- Travelling to and from work, but only where this is absolutely necessary and cannot be done from home
Police will have the powers to enforce the rules, including through fines and dispersing gatherings. To ensure compliance with the instruction to stay at home, the government will:
- Close all shops selling non-essential goods, including clothing and electronic stores and other premises including libraries, playgrounds and outdoor gyms, and places of worship
- Stop all gatherings of more than two people in public – excluding people you live with
- Stop all social events, including weddings, baptisms and other ceremonies, but excluding funerals
Parks will remain open for exercise, but gatherings will be dispersed.
Amid a growing backlash against retailers who continued to sell online, Next said it had stopped taking online orders “until further notice”. The company said it had “listened very carefully to its colleagues working in warehousing and distribution operations to fulfil online orders. It is clear that many increasingly feel they should be at home in the current climate.”
On Thursday the high street chain River Island and the luxury fashion retailer Net-A-Porter also said they were closing their websites. River Island said it would fulfil existing web orders but would not process any new ones as it began closing down its distribution centre in Milton Keynes. Its chief executive, Will Kernan, said it had made some “difficult choices” to protect the health of staff.
Major names high street names including M&S, Primark and Next have already warned of heavy consequences as the UK is forced to stop shopping.
On Thursday the ratings agencies Moody’s and Standard & Poor’s (S&P) both cut M&S’s investment rating to junk. S&P said Covid-19 related restrictions on the high street would “materially reduce sales in its clothing and home division” which would only be partially mitigated by online sales and the anticipated resilience of its food halls.
Kate Ormrod, a retail analyst at GlobalData, predicted sales of retailers’ spring/summer ranges would now be a washout with companies already being forced to cut prices to win custom.
UK high street woes
Thousands of high street jobs have been lost in the last 12 months as a result of high profile retail administrations, and thousands more are at risk as Mothercare, Debenhams and Forever 21 prepare for closures. Here are some of the key industry names that have been affected.
Mothercare: Has 79 stores and 2,500 UK retail staff as its British arm prepares to go into administration.
Regis/Supercuts: Had 220 salons and 1,200 staff when it went into administration in October 2019.
Bonmarché: Had 318 stores and 2,887 employees when it went into administration in October 2019. It is still trading as it seeks a buyer.
Watt Brothers: The Scottish department chain had 11 stores and 306 employees when it went into administration in October 2019. All the stores closed and the majority of jobs have gone.
Links of London: With 35 stores and 350 staff, the jewellery chain went into administration on 8 October 2019 but its sites are still trading.
Forever 21: Had three stores and about 290 employees in the UK when it went into administration in September 2019. Stores are staying open in order to clear stock.
Albemarle & Bond: Suddenly shut all its 116 stores in September 2019 with the loss of about 400 jobs, even though it did not call in administrators. It sold its pledge books to rival H&T in the same month.
Karen Millen and Coast: Had 32 stores and 177 concessions, employing 1,100 people, when it went into administration in August 2019. All sites were closed and the vast majority of staff made redundant after the brands were bought out by online specialist Boohoo.com.
Jack Wills: Had about 100 stores and 1,700 staff in the UK when went into administration in August 2019. Bought by Sports Direct and 98 stores are still trading in the UK and Ireland.
Spudulike: Closed all 37 stores with the loss of about 300 jobs when it went into administration in August.
Bathstore: Had 132 stores and 529 staff when it went into administration in June 2019. Homebase bought 44 stores saving 154 jobs and the brand now trades from 28 stores.
Select: Had 180 stores and 2,000 employees when the fashion retailer went into administration in May 2019. In June administrators at advisory firm Quantuma carried out a CVA closing 11 stores with the loss of about 200 jobs.
Debenhams: Had 166 department stores and more than 25,000 employees when went into administration in April 2019. No store closed immediately and the chain is now owned by its lenders but two closed before Christmas with another 20 due to shut in January when the group completes a rescue restructure expected to result in the loss of 1,200 jobs.
Pretty Green: Had 12 stores and about 170 employees when Liam Gallagher’s fashion outlet went into administration in March 2019. All but one store and 33 concessions closed with 100 jobs lost but 67 saved as the brand was bought by JD Sports in April.
Office Outlet: All 94 stores have closed with the loss of 1,170 jobs after the stationery retailer went into administration in March 2019.
LK Bennett: Had 41 stores and 500 employees when it went into administration in March 2019. The brand was bought by its Chinese franchise partner, Rebecca Feng, saving 21 stores, all the group’s concessions and 325 jobs. But more than 100 jobs lost with the closure of 15 stores.
Patisserie Valerie: Had 200 cafes employing nearly 3,000 people when an accounting scandal prompted the chain to call in administrators in January 2019. About 70 of the group’s 200 stores closed immediately with the loss of 900 jobs. About 2,000 jobs were saved when about 100 Patisserie Valerie cafes were rescued by Causeway Capital, more than 20 of which have since closed. 21 Philpotts sandwich shops were bought by AF Blakemore & Son. and four Baker & Spice cafes a were bought by the Department of Coffee & Social Affairs.
Ormrod said: “Amid a UK lockdown and self-isolation, buying new clothes and footwear is far from a top priority for consumers, making spring/summer a season to forget for fashion retailers – but one with long-lasting consequences.”
Next had already predicted that disruption stemming from the outbreak could wipe £1bn off this year’s sales while Primark has been desperately trying to cancel orders placed with suppliers.
With its stores – and now its website – out of action, Next has been trying to delay orders and is considering leasing extra warehousing to hold stock flowing into the business.
The forced closure of all non-essential shops by the government is a fresh blow for a high street which was already struggling as weak consumer spending was compounded by the shift to online spending. The scale of high street decline was spelled out by new research from the advisory firm Deloitte which showed that a net total of 9,169 stores closed in the UK last year, which was a fifth more – the equivalent of 1,619 stores – than in 2018. That is the equivalent of 25 stores a day.
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