Retailers have axed 85,000 jobs in the past year as weak consumer demand, rising costs and the switch to online shopping, exacerbated by Brexit uncertainty, have put businesses under increasing pressure.
The job losses in the UK’s biggest private employment sector – with particular importance for women – are the latest sign of a crisis on the high street that has seen the closure of thousands of shops and the collapse of some well-known retail names.
While many retail job losses are the result of closures, thousands are also due to cost-cutting, as retailers try to offset cost increases caused by the rise in the legal minimum wage and the apprenticeship levy, higher business rates and an increase in the cost of goods as a result of the Brexit-led fall in the value of the pound.
That has resulted in a 2.8% fall in the number of retail employees in the three months to the end of September, compared with the same period a year before.
More pain could be on the way as research from analysts Retail Economics for advisory firm Alvarez & Marsal suggests major chains have 20% too much store space as a result of a fivefold rise in online shopping in the past decade. The report also found that retailers’ operating costs have risen by nearly 11% in the past five years, while store-based profit margins have halved in the past decade. Retail IT bosses expect one in five jobs in their businesses to be replaced by artificial intelligence or automation within five years, according to a survey by recruitment business Harvey Nash and advisory firm KPMG.
Retail spending, which accounted for nearly 30% of household expenditure in the 1960s, is expected to fall to some 20% of families’ spending in the next 10 years, according to Retail Economics’ analysis of ONS data.
Richard Fleming, managing director and head of restructuring for the European arm of Alvarez & Marsal, said: “Most of the UK’s biggest retail brands are in the midst of a fight for survival. We have already seen some high-profile casualties, and many more are on life support.”
The BRC predicted in 2016 that the number of people employed in retail – about 3 million – would fall by 900,000 by 2025 and that many would find it difficult to transition to new roles.