Guides & Advice
Retail: Guide to surviving COVID-19
Retail: Guide to surviving COVID-19
Lawyers have predicted that one in ten SMEs will be set to collapse post-lockdown. Although harsh, it is a reality we have already seen over the last few months, with even major household names having to take protective action.
The diminished economy caused by COVID-19 has impacted every sector, but retail has arguably been hit hardest. Data from Springboard shows that high street footfall declined by 65.1 percent between 31 May and 4 July - something many stores were unsurprisingly not prepared for.
Even before lockdown, high commercial rental costs, changes in buying habits and plateauing wages had triggered a rise in insolvencies. Unfortunately, the pandemic has put the UK on a downhill slope towards deep recession, accelerating the financial issues of many businesses.
However, this doesn’t have to mean the end for retail. Here are our top tips for survival:
- Assess failings – Undeniably, COVID-19 has highlighted the cracks in businesses’ plans and processes. Thankfully, it has also given them time to review these problems and create solutions.
- Be realistic – The road to recovery is going to be slow and it’s important to recognise that. Ensure any new plans or processes reflect this reality.
- Don’t fear hard decisions – H&M, Boots and John Lewis have all involved store closures in their restructuring plans. Before the pandemic, the strongest-performing stores may have been able to carry those that were struggling, but this is no longer the case. Making decisions quickly regarding non-performing stores is essential, even if they are difficult.
- Think digital – Customer behavior has been moving towards online shopping for a while, but now it has been forced to shift rapidly. Therefore, retailers must accelerate digital development, optimise store portfolios and further integrate their channels. Such streamlining may lead to store closures, cutting bonuses and re-negotiating rental agreements, but could be key to survival.
- Adapt workforces – As well as ensuring websites are equipped for online sales, retailers should also adapt their workforce to match this evolution. For example, hiring more delivery drivers and warehouse staff or re-skilling those whose jobs are at risk.
- Negotiate with landlords – At lockdown’s peak, Debenhams announced it would be closing its Birmingham store. However, after negotiating with the landlord, they were able to keep the store open. It is always worth trying to secure a more suitable rental agreement, especially for stores in large cities.
Whether an established chain or an independent boutique, it is vital for retailers to proactively fight against the threat of collapse. By assessing the business’ position and acting as soon as possible with the help of an expert, retailers can turn the tables on COVID-19.
If your business is experiencing financial issues, and you’d like some support and guidance on how to achieve the best possible outcome, then our experienced corporate restructuring and insolvency team can help – no matter what stage of your journey you’re at, or please contact Gareth Hegarty.
We have launched our guide to recovery and resilience, helping to support businesses and individuals unlock their potential, navigate their way out of lockdown and make way for a brighter future. Further advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.
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