In this extraordinary year of lockdowns, there is always a tipping point when it is better for businesses to shut down completely than stay open with less than a third of their usual clientele. For bars and restaurants, it happened in late March when the public had been told to isolate, but hospitality had been given no official ruling and therefore couldn’t access insurance or government support. When full lockdown happened a few days later, their relief was palpable.
From Wales to France and even parts of Scotland, England’s closest neighbours are shutting non-essential shops and closing beauty salons. But other than Nottingham, where spas have been forced to close, England’s retail spaces and salons are open. Although, with a public increasingly anxious about going out, would it do struggling business owners more good to shut down again?
“If you’re a retailer, of course you want to be open and service customers,” says Peter Mace, a luxury expert at Cushman & Wakefield. “But the difficulty is that there’s no point in opening a shop if trade is terrible, as it’ll cost you more money than you’d make. After the lockdown, some retailers opened in London only to close again – like Ralph Lauren on Regent Street. If the government is offering a good enough compensation package, I imagine logic dictates it’s a trade worth making for some retailers at this stage.”
With news coming today in from Dominic Raab that the government wouldn’t rule out introducing Tier 4 in certain English cities – which would most likely see the closure of non-essential retail – this question could fast become a reality for shops in badly affected areas.
Wales is a good example of the sort of package retailers and salons might expect under Tier 4. At present, small independent boutiques there are being given £1000 a week to survive while bigger businesses get £2000. It is also likely that – similar to France, which has created a €20 billion package for small companies affected by the second lockdown – a wide range of loans would be on offer.
Given the high number of cases, Liverpool would be one of the first cities to move up into Tier 4, but retailers are not looking forward to the next step. “We don’t want the government to close down non-essential retail, as this would be catastrophic for our industry which is already on a precipice,” says Justine Mills, the founder of Cricket, Liverpool’s most successful designer boutique.
“To shut now in the lead up to the essential Christmas period would mean added stress for many businesses, such as ours, and any government incentives would have no impact as stock is already bought and paid for.”
Cricket, like many fashion boutiques and all spas, has no online retail platform so closure of shops means no sales at all over the entire period.
“If the government does close non-essential retail, they have to be supported with online sales platforms and the education tools on how to make them function successfully,” says Tamara Cincik, the founder of government lobbying firm Fashion Roundtable.
“Or they need a commitment from Amazon and other online platforms to support local companies with their terms and conditions, so our sector can keep in touch with consumers and remain relevant. Not all retailers are tech savvy and this needs a commitment, training and time.”
Unlike fashion, though, the spa industry has no online platform to pivot to, and enforced closures in Nottingham have led to an outcry, with salon owners saying they have been unfairly marginalised when there is no evidence of increased infection rates in their premises. Without the backing of any online sales, government support is also highly unlikely to match what these businesses can make on their own.
“A lot of support is at the local authority’s discretion, so there is not a lot of certainty that businesses owners can access help during a mandated closure or Tier 3 Plus,” says Millie Kendall, the CEO of the British Beauty Council. “More than 20 percent of the beauty sector fell through the net during the first lockdown, as we have a large proportion of our industry that are mobile and some were just not eligible.”
Ed Law, the CEO of Eden Hall Day Spa, which is the largest spa in Nottinghamshire – and now forced to close – agrees. “We don’t want to rely on other people’s help and on hand-outs, but we also passionately believe in the product we offer,” he says. “Yes there are loans on offer but all you are doing is loading up your business with debt and borrowing from the future.”
The problem though, for fashion brands and beauty salons alike, is that the stricter the restrictions become, the less realistic it is that people are going to want to buy clothes or have their nails done – what is the point if there is nowhere to go? So even if they do stay open, many salons and independent boutiques will still need loans to get through the next few months.
Which is why in moments like these it feels like there is no good solution. Keeping shops open means watching them struggle by on low sales without insurance pay-outs – while potentially spreading the virus – but close them down and not all will reopen.
“Lockdown is not the solution for our hard working largely SME retail sector. In fact it’s the death knell,” says Cincik. “But equally, shops only being allowed a couple of shoppers at a time is clearly not cost effective in terms of staffing, rent, rates and utility bills. This has now been going on most of the year and something has to give. I hope it’s not our beloved high streets.”
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