Store closures up 25% on 2019

The Centre for Retail Research has found that nearly 14,000 stores have permanently shuttered in 2020. 

Permanent store closures are up +24.8% on the same period last year, according to the Centre for Retail Research, which has also found that non-food retailers have so far lost around £9b in sales.

The news comes as analysis by the consultancy Altus Group indicates retail space may ultimately have to be repurposed in order for landlords to keep up with rent payments. According to the research, 38% of executives have already been switching their retail properties to other uses, while a further 57% were considering doing the same. A shift to mixed-use properties is a possibility for many retailers, which Altus says will probably offer a ‘community type focus’.

Professor Joshua Bamfield, a director at the Centre for Retail Research, believes at least 12.5m m2 of a total 125m m2 of retail floorspace will have to be altered. “There is no alternative to repurposing,” he said. “As much as 10% of retail floor space might need to be repurposed in the short to medium term, but could be much higher in major cities eventually.”

A combination of lockdowns, lower consumer footfall and a dramatic shift to online shopping have hit the high-street hard, and there are fears a second national lockdown could spell major trouble for those retailers that managed to weather the first. The Covid-19 pandemic has seen shoppers take to the internet like never before, resulting in a 40-50% growth in online shopping, according to IMRG, the industry body for online retailers. Even before the pandemic, in the first couple of months of 2020, online sales were reportedly up 5% compared to the same time last year. A spokesperson for the IMRG has warned that the retail industry can expect an online shopping increase of around 30% during the Christmas shopping season, and says that if stores are once again forced to shutter this may soar to 50%.

The challenges facing retail tenants and landlords have also impacted workers, with some 125,000 job losses in the retail industry so far this year, and more likely still to come.

Business rate payments were paused this year, easing some financial pressures on struggling businesses, but Chancellor Rishi Sunak’s latest announcement didn’t see this pause extended. Instead, he urged business to focus only on ‘viable’ new jobs, and revealed a new top-up scheme for workers unable to carry out their roles due to the latest lockdown restrictions.

Asda bidding war could see retailer return to UK ownership

A group comprising the billionaire Issa brothers and TDR Capital is currently the frontrunner to buy the Asda chain. 

Asda, which has been owned by the major US retailer Walmart since 1999, could soon return to UK ownership if a consortium made up of the billionaire Issa brothers and the private equity firm TDR Capital is successful in its attempts to buy the retail chain for an estimated £6.5b.

Reports indicate that US private equity firm Apollo Global Management also has a hat still in the ring.

Walmart is selling its majority stake in Asda after a merger with Sainsbury's was blocked on competition grounds; in July 2019, The Competition and Markets Authority (CMA) rejected a deal between Sainsbury’s and Asda and banned them from merging for another 10 years.

Brothers Zuber and Mohsin Issa, founders of EG Group

The Blackburn-based Issa brothers, Mohsin and Zuber, have an existing interest in Asda through their petrol forecourt business, EG Group, half of which is owned by TDR Capital. Mohsin and Zuber each own 25%. Asda recently announced its expansion into convenience stores and will initially trial 'Asda On the Move' at three of EG Group's fuel station forecourts in Ashby, Leamore and Primley in the Midlands.

Walmart, which would continue to hold a minority stake in Asda after any deal, has so far declined to comment on the sale process.

Let’s play Twister, let’s play Risk…. it’s the Friday Blog!

Games are back in the news this week, and not just because they’re still selling incredibly well. No, this time it’s because the government has turned to heritage gaming for inspiration on how to defeat coronavirus. Rather than complex strategising and scenario planning long into the night, it appears that our illustrious unelected leader, super spore caster Dom, and his mate Boris Johnson have been holding their own Hasbro Games Night at Number 10 instead. That would certainly explain the photo on the front of last week’s Sunday Mail – Johnson wasn’t doing press-ups, he was playing Twister (beer belly: red, green, yellow and blue). Their game-playing shenanigans have also given rise to the UK’s new virus response strategy – now officially referred to in Parliament by its no-longer secret code name, Whack-a-Mole. If Hasbro isn’t working on a special limited edition ‘2020 coronavirus edition’ of the original game as we speak, I would be truly amazed. Rumour has it the pair also played obscure board game ‘Escape from New York’, but adapted it for the modern era by renaming it ‘Escape from Leicester.’ Maybe other government policies will be based on D&B’s Games Night in future – instead of pay rises, maybe all NHS staff could be given a game of Operation instead? And let’s just hope that no one gives them a copy of Risk or who knows where we’ll end up?

Back in the real world, the virus continue to play havoc with our old routines – both Autumn Fair and Comic Con have officially been cancelled this week, as organisers grapple with the realities of putting on trade and consumer shows in the current climate. I’m sure it is technically feasible with an awful lot of planning and a raft of safety measures, but as one sanguine show organiser said to me recently: “Just because you can do something, doesn’t mean you should.” Indeed.

Some may even feel that sentiment could apply to the re-opening of pubs, bars, restaurants and other businesses this weekend, especially after recent developments in the USA. But looking at the move more optimistically, it will hopefully bring even more people back out into towns and cities, giving an additional boost to retailers. From what I am hearing, re-opening has generally gone pretty well – value sales shot up in the first week, and while that trend hasn’t been sustained in week two, some indies have told me that they’ve seen footfall pick up a bit this week, so maybe consumers have been favouring local High Streets over bigger destinations? In the first week, I understand that all supercategories were in growth for the first time since lockdown, even collectibles – anecdotally, it seems that kids are keen to spend the pocket money they’ve been saving up for the past 100 days.

However, despite the fact that the toy market continues to perform solidly, it is also inescapable that the wider retail channel and other parts of the UK economy are in for a pretty rough ride. The past couple of weeks has seen host of redundancies and store closures being announced: last week, we reported that Very Group would be losing over 100 people from its head office team, while this week saw John Lewis chairman Sharon Lewis warn of the impending closure of an unspecified number of stores, together with one London office. Details of which stores are for the chop will be revealed in July, at which point we’ll get an idea of how many job losses will follow. We already know the answer to that question at Harrods, where 700 roles – 1 in 7 of the workforce – will be disappearing. Overall, over 12,000 jobs in the retail and aviation industries were lost in just two days this week – incredibly sad and if this trend continues after the furlough scheme ends, it will surely curtail the speed and strength of economic recovery.

Thankfully, not all UK retailers are in the doldrums – far from it in fact. B&M saw its revenue rise by over 33% in its first quarter, while sales at Argos rose by over 10% over the same period, aided by a 78% rise in home deliveries, with toys cited as one of the key category drivers. Given how well toy sales have fared in general, we can but hope that this will restrict the number of job losses in our own market. However, there is a hard truth here: the government’s furlough scheme was incredibly generous and has undoubtedly saved many companies from going under in the short term. But it didn’t differentiate between businesses which have a long-term future and those which, frankly, don’t. I understand why means testing the furlough scheme would have been physically impossible given the time frame, but it did mean that millions of pounds were spent propping up zombie businesses, merely delaying the inevitable (we can see that in our own little corner of the media world…). Ultimately, the fallout from the pandemic is likely to result in the mother of all zombie business clear-outs – but I genuinely believe that we don’t actually have that many of those left in the toy market anymore, so we may yet escape relatively unscathed compared to many other sectors. Let us hope that proves to be the case.

One person whose current role has come to an end is Groupon trading director David Ripley, who left the business earlier this week. David will be in the market for a new challenge from 1st October and has told me that he would love for that to be in toys. However, in the meantime, he is keen to use his garden leave productively to support toy-related charities or not for profit toy organisations over the next three months, giving something back to the industry he has been a part of for so long. He can be reached at DavidJMRipley@Gmail.com or on 07738 999210 if you have a project or idea you’d like him to consider.

Before I go, if you’re looking for some uplifting reading for the weekend, may I recommend the special July ‘ 2020 reboot’ issue of Toy World? The physical copy is now arriving through letterboxes, but you can read the digital edition here. On so many levels, this strange and unpredictable year starts now, and this edition fires the starting gun on the all-important second half of the year, celebrating the fresh start that awaits the toy community. Enjoy!

For now, we’re all starting to get our heads around what post-lockdown life looks like in the short term. One picture which has been doing the rounds on social media this week caught my eye: is this what next year’s Toy Fairs might look like? If so, I for one can’t wait…

Friday blog bears

L.O.L. Surprise! details new collectible launches

The brand has launched two new series and a new product range, with further surprises to be revealed this autumn/winter.

 

L.O.L. Surprise! J.K. is exclusive to The Entertainer.

New collectible launches are on their way from L.O.L. Surprise!, while a new product range, exclusive to the Entertainer, will bring more excitement to the unboxing experience.

Exclusive to The Entertainer, L.O.L. Surprise! J.K. is the first mini fashion doll with real hair, real fabric fashions and real tall shoes. New characters are Diva, M.C. Swag, Queen Bee and Neon Q.T. Each mini doll has 15 surprises and is suitable for ages four plus.

L.O.L. Surprise! O.M.G. Fashion Dolls Series Three includes four new characters: Roller Chick, Da Bo$$, Chillax and Class Prez. Each fashion doll is the big sister to L.O.L. Surprise! dolls. Fans can unbox 20 surprises, including  fashions and accessories. The new dolls give fans a unique unboxing experience, with packaging that transforms into a reusable dressing room play set for even more fashion play.

Finally, there’s the L.O.L. Surprise! Boys Series Three. Fans can unbox the brother of one of the fan favourite L.O.L. Surprise! dolls. Each character has a similar style to his sister character, but with his own unique twist. Characters include Sweet Guy, Spicy Kid, plus more, including ultra-rare character, Steezy.

LOL Surprise OMG

 

 

The new collectible launches will be supported through PR and social media, including teasers, influencer and celebrity collaborations, customisation campaigns and a digital viral content. More surprises will be revealed in autumn/winter 2020.

L.O.L. Surprise! is for children aged six plus. For more information, click here.

19 Debenhams stores set to close this month

Closures will result in approximately 600 job losses.

As reported by ThisIsMoney.co.uk, Debenhams faces a make-or-break year as it begins a massive programme of store closures.

Three stores closed last year, 19 shops will shut their doors between 11th-25th January, and a further 28 will follow next year. The list of 19 includes stores in Eastbourne, Guildford, Wolverhampton and Canterbury.

Independent retail analyst Richard Hyman predicted this year would be crucial for many of Britain's high street retailers, saying: "Debenhams and House of Fraser will not end this year in the shape they are in today; at best they will be much smaller and at worst they won't exist at all."

He made the suggestion that Debenhams owners - a conglomeration of banks and hedge funds - have delayed its bleak reality, saying that in a way the chain has 'become a zombie'. Last year it announced that it would close its 50-worst performing stores using a company voluntary agreement (CVA).

Three stores, York, Haverfordwest and Orpington, closed last year. The remaining 28 will be chosen based on the outcome of crunch talks with landlords. Under the CVA, rents will also be cut across many of its remaining 163 stores.

Next week retailers will update the market on the crucial Christmas trading period although the Debenhams rescue deal means it is no longer required to hand out financial information.

Debenhams' chief executive, Stefaan Vansteenkiste, said the chain was working to implement a 'transformation' despite a 'challenging retail environment'.

Store locations and dates of closure

January 11th:

Altrincham, Greater Manchester; Kirkcaldy, Fife; Wandsworth, London; Birmingham,The Fort; Walton-on-Thames, Surrey; Wolverhampton.

January 15th: 

Chatham, Kent; Slough, Berkshire; Welwyn, Herfordshire; Great Yarmouth, Norfolk; Witney, Oxfordshire; Stockton-on-Tees, Co Durham.

January 19th:

Ashford, Kent; Canterbury, Kent; Folkestone, Kent; Southsea, Portsmouth; Eastbourne, East Sussex; Southport, Merseyside; Wimbledon, London.