Trouble came in threes for the high street yesterday.
Struggling retailer Mothercare announced hundreds of redundancies as part of its turnaround plan while 600 jobs hang in the balance as high street butchery chain Crawshaw collapsed into administration. Meanwhile, retail bellwether Next’s shares fell eight per cent in early trading as it revealed its sales growth slowed in the third quarter.
The UK high street is officially suffering its worst year on record – and things are likely to get worse. Big brands like Toys R Us and Maplin have gone bust this year while others such as House of Fraser and Debenhams are fighting to keep their heads above water. Even the chairman of M&S concedes “we have no right to exist”.
Earlier this week, statistics from the government’s Insolvency Service showed the biggest rise in UK company insolvencies since the depths of the financial crisis. Analysts said the stumbling retail sector bares hefty responsibility for the nearly 20 per cent year-on-year rise in the number of firms collapsing in the third quarter.
These grim stats come in the same week as chancellor Philip Hammond’s Budget, which many had hoped would outline measures to give struggling retailers the firepower to fight the cocktail of online rivals, rising rents and the burden of business rates.
The chancellor’s generosity was instead directed squarely at the small and independent retailers, including a £900m business rates relief package for small businesses with a rateable value of £51,000 or less. His announcements were branded “pathetically tokenistic” for not going far enough to help big retailers whose business rates bills far exceed the £50,000 limit.
Retail experts called on him to do “more than tinkering around the edges” as the majority of the UK’s 3.1m retail workers are employed by firms that will not benefit from Hammond’s business rates announcement.
But in truth, there’s little Hammond can do for the big firms – short of subsidising them.
Yesterday’s retail flops combined with a lack of central government support for the big chains means there’s likely to be more doom and gloom facing those who were once high street stalwarts. They’re on their own in the run up to the crucial Christmas period, which may well be the last for some of Britain’s biggest retailers. And they can't look to the government to save them.