THE NEUTRAL ZONE: DEEP DIVE
British retail outlets Debenhams and Arcadia Group have begun shutting down, putting 25,000 jobs at risk. The two giants struggled with the coronavirus lockdowns as well as a rise in e-commerce.
Retail analyst Pippa Stevens said Arcadia’s brands have an opportunity to survive if they are broken up but Debenhams’ hopes of living on “are slim.” The retail sector in the U.K is dealing with the coronavirus as well as Brexit, compounding Britain’s worst recession in three decades. The Dec. 31 expiration of the EU trade deal will worsen the situation further if an agreement is not reached.
The fall of Debenhams and Arcadiais part of a larger trend as more and more people shop online. Before coronavirus pushed even more shoppers online, retail outlets were already at a disadvantage due to the costs associated with a large real estate footprint.
While this year’s Black Friday was deemed “the quietest in 20 years” due to the pandemic, online sales rose significantly: Research firm IHS Markit predicts that overall U.S. retail sales, which includes online, will rise 7.6% year-over-year this holiday season. Markit found that pre-pandemic spending levels in February were 28% lower than they were in October, while in-store clothing and accessory stores were down 13% compared to the same time frame.
The pandemic is shifting the focus in retail towards supply chain protection, omnichannel fluidity, and technological investments to prepare for the future of customer needs. Beauty product startup Beautycounter is launching a live-streaming studio that is meant to replicate in-store experiences for coronavirus-weary customers. “It replicates the two-way conversation you would be able to have with the brand in-store,” said Beautycounter founder and CEO Gregg Renfrew. “While the customer can’t actually test a product from across their screen, they can talk to an expert about what color might work best or what look they’re trying to create.”
The death of the department store and the American middle class – Vox – 11/30/2020
Around 100 storefronts in American Dream opened their doors to customers in October and November, but the complex’s future is not guaranteed. Its owners, Triple Five Group, missed several mortgage payments this summer, and it’s not clear who might fill the enormous holes left by the three fallen department store chains, or which other retail tenants will opt out of their leases now that the development is missing three of its anchors.
UK high street left reeling as Debenhams goes into liquidation – The Guardian – 12/1/2020
The liquidation of the 240-year-old business came just a day after Philip Green’s Arcadia group, the owner of brands including Topshop, Miss Selfridge and Wallis, collapsed into administration. A total of 25,000 jobs are now at risk at the two companies, which were once part of the Burton Group. The demise of the department store chain will hit many towns across the UK, as the shops are anchor tenants in numerous shopping centres and key attractions on high streets
Former Walmart CEO says coronavirus will challenge department stores – Fox Business – 12/2/2020
Simon went on to say that the landscape would become “more difficult” for brick-and-mortar retailers to survive. “You’re going to have to be digitally engaged or omnichannel in order to be successful. You’re going to have to have a unique position or selling proposition, that you have to be special,” he said.
In Britain, a ‘retail house of cards’ begins to fall. – New York Times – 12/1/2020
“The retail house of cards on the high street is in danger of collapse,” said Susannah Streeter, an analyst, at Hargreaves Lansdown. She said Arcadia’s brands were among the most prominent in Debenhams, “so its collapse into administration clearly put the frighteners on management.”