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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2958

Retail Apocalypse: Suffering of store chains to continue as Christmas sales did not buckle the trend

Hemantha Abeywardena writes from London…

Struggling Store Chains in Britain that pinned their hopes on Christmas sales to revive their businesses do not seem to have seen the light at the end of the tunnel. Instead, they are bracing themselves for more shocks and tribulations in the New Year, as the collapse of yet another major chain, HMV, the music and film retailer, was announced just after the Christmas.

The statistics are alarming, if not frightening: on average, 14 shops are closing everyday according to retail analysts; more than 1100 shops have disappeared in the first half of the year from top 500 High Streets in Britain during the same period; it is estimated that over 165,000 jobs will be gone in the New Year in proportion to the anticipated store closures.

No store seems to be immune to the impending disaster despite them being the global icons. Marks & Spencer, New Look and Debenhams are planning store closures in High Streets in Britain next year. They are struggling to cope with rising cost of running the stores at a time, when the consumer demands on the shop floors are just ebbing away.

As the number of active shoppers is on decline, it triggers off yet another chain of events: those who visit restaurants, cafes and pubs go down as well, while leaving them vulnerable too.
It’s not just a British issue. Even in America, the trend continues unabated despite the recent encouraging economic data. In short, it’s going to be universal in the long run.

While sensing the dismal outcome during the festive period, most retailers slashed the prices substantially in order to attract the customers to shopping centres. Although, there was some heightened activity on Christmas Eve, it was nowhere near enough to slow down the trend, let alone reversing it; there was so much they could do in terms of reducing prices.

Of course, the changing consumer habits are partly responsible for the store closures. It, however, is not the only cause. In this context, it is unfair to divert the tide of blame towards both Amazon and EBay in order to single them out for the unfortunate situation.

For instance, ASOS, a popular online retailer, also issued a profit warning recently. That means even online retailers have not managed to insulate themselves fully from the troublesome headwinds. It indicates something that has been overlooked by retail analysts up until recently – the reluctance of the customers to spend online or inside shops, perhaps feeling insecure on many fronts, ranging from trade disputes to Brexit uncertainties.

Although the government has come under immense pressure to come up with a plan to deal with the impending crisis, there is so much it can do apart from reducing taxes to a certain extent and allocating a fund to help the worst hit by alleviating the pain a little, in addition to taxing the two famous scapegoats.

A treasury secretary has already spoken to the media saying that the limits of a course of action that the government can embark upon.

He has even referred to the famous king, Canute the Great, the ruler of England, Denmark and Norway in the 12th century, who famously showed his ambitious, flattering courtiers that he did not have control over incoming tide - in a classic display of humility, despite being a king.

Since there is no silver bullet in the offing, retailers may slowly prepare themselves to accept the inevitable in the long run.

The consumer habits are evolving and irreversible. Those who have been affected by the change can find some solace in the fact that how Britain was transformed from a manufacture-based economy to that of a service-based one during the past few decades, leaving the past governments just passive observers before an inescapable tide.

- Asian Tribune -

Retail Apocalypse: Suffering of store chains  to continue as Christmas sales did not buckle the trend
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