Harvey Nichols, The Fragrance Room

LONDON — COVID-19 doesn’t play favorites when it comes to job losses or damage to businesses, with the virus attacking every level of retail, from mass to luxury.

Its latest victims? Marks & Spencer, Ted Baker and Harvey Nichols.

All three retail chains will together lay off more than 1,000 workers due to the impact of the coronavirus on retail since March. Store closures, social distancing measures, extended furloughs and consumers’ loss of appetite — except, of course, for a bargain — have devastated retailers’ top and bottom lines.

The layoffs are mounting this month because, as of August, employers must start contributing cash, health care and pension contributions to the government’s furlough scheme.

Under the furlough scheme — which was put in place to prevent massive job losses under lockdown — more than eight million workers had 80 percent of their salaries paid for by the government, up to 2,500 pounds per month.

Having flagged possible layoffs in May, M&S came through with a number on Monday, confirming that 950 jobs, mostly management positions, would be cut.

 

A Marks & Spencer high-impact sports bra.

A Marks & Spencer high-impact sports bra.  Courtesy

Job losses will cut across central support functions in field and central operations, and in property and store management. M&S employs 78,000, so the cuts represent 1.2 percent of the workforce.

Sacha Berendji, director of retail, operations and property at M&S, said the proposals reflect “an important next step” in the retailer’s Never the Same Again program, which is aimed at accelerating its transformation to become a more streamlined business.

“Through the crisis we have seen how we can work faster, and more flexibly, by empowering store teams, and it is essential that we embed that way of working,” said Berendji, adding that M&S was doing its utmost to support workers through the redundancy process.

In May, as M&S reported a near 40 percent drop in year-end profits to 27.4 million pounds, and revenue of 10.18 billion pounds, 2 percent lower than last year, chief executive officer Steve Rowe had said broadly the same thing.

He argued that M&S could do more with less, and that lockdown had taught every employee to multitask. Although most M&S stores remained open during lockdown, selling food and essential items, huge swathes of its shop floors dedicated to clothing and accessories were cordoned off per the British government’s guidelines.

On Monday, M&S emphasized that the layoffs were part of an overall strategy aimed at reducing “management layers,” and role duplication, and making better use of technology and insight that would allow remaining staff to spend more time with the customer, on the shop floor.

It said under the new structure, each manager will need to become an entrepreneurial shopkeeper, with “full accountability in driving standout customer service, ownership of their profit and loss, leading a high-performing team and ensuring the standards of their store.”

Ted Baker, meanwhile, is planning to slash 500 jobs, or about 25 percent of the workforce, including roles at the company’s head office.

“As part of our continuing transformation plan, we have been assessing the appropriate level of staffing across our business and are in consultation with affected colleagues,” a spokesperson said.

“We have not taken this decision lightly, and would like to thank all our colleagues for their hard work and commitment. However, we believe this is necessary in order to transform Ted Baker and create a more sustainable business in the future.”

 

London retail reopens following the COVID-19 closures.

London retail reopens following the COVID-19 closures.  Manuel Valcarce/WWD

COVID-19 has only exacerbated a difficult situation at Ted Baker, which has issued a series of profit warnings over the past year and has been battling with accounting and management troubles.

Earlier this year Rachel Osborne, Ted Baker’s chief financial officer, was promoted to the role of ceo. She was the third person in 12 months to hold the top management role at the embattled company.

Ted Baker had already signaled job cuts when it detailed its three-year transformation strategy in June. The overall plan is aimed at improving operational performance and efficiency, and was put together pre-COVID-19.

Part-time and full-time roles will be affected, and Ted Baker has begun speaking to workers’ unions and organizations.

It is understood that Harvey Nichols also plans to lay off staff, although the retailer has not yet put a number on the jobs it will cut.

A Harvey Nichols spokesperson declined to comment on a story that appeared on July 19 in The Sunday Times of London. It quoted a memo from Manju Malhotra, the store’s ceo, saying there “may be staff redundancies at all locations,” and the company would seek to minimize job losses.

All three retailers have major store estates across the U.K., as well as online businesses, and join a host of brands and retailers that have been forced to lay off staff, including Harrods, Mulberry, John Lewis and Boots.

All of those names have been impacted by store closures and a slowdown in footfall growth figures since stores were allowed to reopen one month ago.

After an initial rush on retail, with long lines forming outside Primark, Zara, Harrods and Selfridges in London, the growth in shopper numbers has begun to slow, according to Springboard, which measures footfall on high streets and at shopping centers across the U.K.

London has been particularly hard hit by the evaporation of the tourist trade, due to rules surrounding international travel.

Last week New West End Company, which represents 600 businesses across Oxford Street, Bond Street, Regent Street and Mayfair, said that in the first full month of retail reopening, the neighborhood welcomed 5.1 million visitors, a 73 percent decline year-over-year.

 

Lining up outside Chanel in Chelsea on June 15, when London retailers reopened.

Lining up outside Chanel in Chelsea on June 15, when London retailers reopened.  Matt Alexander

While footfall has been slowly rising, London is faring worse than the rest of the U.K.: It is 19 percent lower than the national average. New West End argued that without further action and support from the British government, the lack of domestic and international tourists, and office workers, could lead to a 5 billion pound loss in sales this year, putting more than 50,000 jobs at risk.

On Monday, Springboard said footfall across the the country’s retail destinations during the week of July 12 to 18 rose 4.5 percent compared with the week before.

That was less than half the rise of 10.6 percent that occurred during the previous seven-day period, which was the first week following the reopening of hospitality and leisure businesses in England on July 4th.

Last week, the year-over-year decline in footfall was minus 40.2 percent.

“Last week demonstrated that the longed-for flood of shoppers returning to bricks and mortar destinations and retail stores once again became a trickle, with a week on week rise in footfall that was less than half that in the previous week,” said Diane Wehrle.

“Despite the limited rise in footfall, the year on year result is at its most modest yet, which does provide a glimmer of hope for the struggling retail industry,” Wehrle added.

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