Mass Layoffs Sweep Across British Retail as COVID-19 Takes Its Toll

LONDON — First, the euphoria of retail reopenings after three months in lockdown, and now the misery of job cuts.

Three marquee names in British retail — Harrods, Topshop and John Lewis — have revealed layoffs due to damage incurred from the coronavirus lockdowns and the subsequent social distancing measures now that stores have reopened.

Retailers here are fighting on multiple fronts: Some were already trying to cut costs and restructure their businesses before COVID-19 even hit, others are arguing with landlords over unpaid rent, while others are having to swallow the bitter dram of diminished footfall — and revenue — due to in-store hygiene measures.

Shops here may be open, but there are so many limitations on selling: Clothing tried on in dressing rooms needs to be cleaned and quarantined; some products cannot even be touched; restaurants and bathrooms are shut for now. And makeup counters? Forget about it.

Beauty assistants cannot make physical contact with customers. While they can spritz fragrance from a distance, they have to demonstrate skin care and cosmetics on themselves. It’s making some customers think, “What’s the point? I’ll just buy it online.”

London’s stores in particular are suffering from the decline in international travel and tourism, which has been their lifeblood until now.

Harrods has confirmed it’s looking to reduce up to 14 percent of its workforce of 4,800. Job cuts will come from those parts of the business “most adversely impacted by the loss of trade” due to the lockdown.

The luxury retailer did not specify which parts of the business had been hit the hardest. The measures, Harrods said, are aimed at enabling recovery in the short term, and protecting business in the longer term.

locked down Harrods showing Rainbow hoardings in support of the NHS and critical workers.Coronavirus outbreak, London, UK - 17 Apr 2020
Rainbows adorn a locked-down Harrods in London during the coronavirus crisis.
CREDIT: Nick Harvey/Rex Shutterstock

Throughout lockdown, Harrods said it paid furloughed employees in full and provided support through its in-house Corporate Health Service. It said it would continue to help affected employees find new employment.

In a note to staff seen by WWD, managing director Michael Ward called these past few months a “terrible period for the country,” adding that “with a heavy heart, I need to confirm that due to the ongoing impacts of this pandemic, we as a business will need to make reductions to our workforce.”

Ward said it would take “time and a drastic improvement in external conditions” for Harrods to recover and return to growth.

He added that social distancing measures are having a “huge impact” on the store’s ability to trade, “while the devastation in international travel has meant we have lost key customers coming to our store and front-line operations. While early signs since reopening are optimistic, this recovery will take longer than any of us would like.”

Ward added that in his 15 years running Harrods, he’s overseen some challenging times, but this is “undoubtedly the biggest challenge we have faced. Nothing compares to the sadness and loss at having to let valued colleagues go.”

Harrods’ parent is Qatar’s state-owned holding company, the Qatar Investment Authority. QIA sits on hundreds of billions of dollars of assets, including large swathes of residential and commercial property across central London. Harrods, which QIA has owned since 2010, is a jewel in its crown.

WWD contacted QIA for comment about the layoffs, but the company did not respond at press time.

Harrods plans to press ahead later this week with the opening of its first outlet store at Westfield London. It also plans to open two pilot H Beauty stores later this year at shopping malls at Lakeside in Essex and Milton Keynes in Buckinghamshire.

The Westfield store will mostly be selling spring 2020 sale stock, and is meant to take footfall pressure off the main Knightsbridge unit and help with social distancing as consumers hunt for bargains.

John Lewis, meanwhile, said its job cuts would result from some stores not reopening after lockdown, although it did not put a number on the potential layoffs.

“The reality is that we have too much store space for the way people want to shop now,” a spokesperson for the John Lewis Partnership said. “As difficult as it is, it is highly unlikely we will reopen all our John Lewis stores.”

No decisions have been made yet, and details will be shared with staff by the middle of July, the spokesperson said.

The parent company, John Lewis & Partners, operates 50 shops across the U.K., 36 of which are department stores. It also has stand-alone home stores and smaller shops at St. Pancras International train station in London and Heathrow Terminal 2.

Its portfolio includes Waitrose & Partners supermarkets and it employs 80,000 people across all of its businesses. The food business is bigger than its nonfood one.

Topshop’s owner Arcadia, which teetered on the edge of bankruptcy last year and was restructuring long before lockdown, said it plans to cut head office jobs due to the impact of COVID-19 on the business overall.

“This restructuring is essential to ensure that we operate as efficiently as possible during these very challenging times,” said the company, adding that about 500 of the 2,500 head office jobs will go.

“We deeply regret the impact this will have on those individuals affected and will do everything we can to support them,” the company said.

There will most certainly be more cuts as businesses — especially in London — grapple with the lack of tourists, social distancing, the possibility of a second spike in COVID-19 cases — and local lockdowns.

The British government’s decision to lock down, and seal off, the city of Leicester, in England’s East Midlands region, until July 18 is a chilling reminder that the coronavirus continues to thrive and threaten lives and livelihoods in certain pockets of Britain, and the world.

The Centre for Retail Research, meanwhile, has updated its projections for job losses in the U.K., due to COVID-19.

It believes that 20,622 stores will close, compared with 16,073 in 2019, and that 235,704 people will lose their jobs, compared with 143,128 last year.

In the U.K. this year, lost sales will amount to 17.28 billion pounds due to the impact of the virus and quarantine measures, the research center said.

A number of retailers and chains have collapsed, with some being repurchased, downsized, restructured or reduced to trading online only. They include Debenhams, Laura Ashley, Cath Kidston, mall operator Intu Properties, Victoria’s Secret, DVF Studio, the U.K. arm of Victoria’s Secret, Oasis and Warehouse.

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