BT and Arnotts unlikely to be last retail victims of Covid-19

Low footfall, high rents and a switch to online shopping combine to undermine the sector

Brown Thomas managing director Donald McDonald opens the doors at the Grafton Street store on its reopening after the Covid shutdown. Photograph: Nick Bradshaw/The Irish Times

Brown Thomas managing director Donald McDonald opens the doors at the Grafton Street store on its reopening after the Covid shutdown. Photograph: Nick Bradshaw/The Irish Times

 

Brown Thomas and Arnotts are not just loved by consumers, they are also adored by their employees, many of whom have been with the retailers for years.

That may in part reflect the very personal tone of managing director Donald McDonald’s announcement of 150 job losses across the group on Thursday. Telling staff the news was, he said, the “toughest decision” he’s had to make during his time at the company.

It is highly likely that, in the coming weeks and months, we are going to see plenty more redundancy announcements coming from retailers, many of whom are struggling to stay afloat.

Having been forced to shut stores for months they now find that, having reopened, business is dead. Footfall is down because consumers are still wary of being out in public. Many shoppers have also taken their business online. Add high rents to the mix and the future for the retail sector looks bleak.

Across Britain, a number of household names have announced job cuts and store closures due to the Covid crisis, including the likes of Boots, Marks & Spencer, WH Smith and John Lewis. The picture is expected to be replicated here.

To some extent, it already has been. On Dublin’s Grafton Street – one of the world’s most expensive shopping districts – Cath Kidston, Monsoon and House of Ireland are among the stores to have shuttered recently.

Bewley’s, which plans to reopen at the end of this month, came perilously close to staying shut due to Covid-19 and the cost of rent.

UK department store Debenhams, which announced 2,500 jobs losses recently, placed its Irish business, which operated 11 stores, into liquidation a few months ago at a cost of 2,000 jobs.

Many retailers have also stopped paying rent when they were shuttered. The Irish Times reported on Thursday that Jervis Shopping Centre in Dublin has now issued legal writs to a number of tenants over rent disputes.

And Retail Excellence has been seeking rent talks with many shopping centre owners on behalf of its members. Duncan Graham, managing director of the group, said it is likely to be difficult to replace the retailers that disappear.

Incentives

“There is a lack of incentives to entice entrepreneurs to open a new store. And a lot of big brands like Nike and Adidas are now focusing on going direct to consumer rather than wholesaling, which is inhibiting independents from opening,” he said.

If we want to avoid our much-loved stores from shutting for good, we need to get out to them more he suggests.

“It is vitally important that we continue to push consumers to shop local and support the best in Irish retail across our high streets in the coming months as we move into the crucial autumn season,” said Graham.

The point takes on particular resonance in light of online shopping statistics showing that as much as 70 per cent of the State’s web spend goes to companies in other jurisdictions.

Arnold Dillon, director of Ibec-affiliated Retail Ireland, says that while the planned VAT reduction will help retailers, further assistance will be needed.

“The crisis for many retailers is far from over,” he said. “The focus must remain on protecting viable but vulnerable retailers through this period. This will demand significant additional supports.”

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