High-street stroll reveals ravaged retail landscape

A week of fine days has filled the outdoor terraces of London’s bars and restaurants and brought shoppers back into the West End to spend their money in person for the first time in months. But a walk down Oxford Street reveals the extent of the damage to Britain’s retail landscape with one shopfront in eight boarded up.

"Be the Future of a Global Flagship Opportunity," reads an estate agent's sign over the door of the huge, empty former Top Shop at Oxford Circus. Farther west towards Marble Arch, a boarded-up, neoclassical building vacated by Forever 21 two years ago looks across the street at a shop first opened by HMV in 1921, now also closed down.

“Reinventing the Nation’s High Street”, boasts a hoarding hiding an empty site, advertising a plan for a greener, smarter future for “Oxford Street District” at the centre of a “world-leading, forward-facing urban district”. There are boarded-up shopfronts along Bond Street too but most of the luxury goods stores have reopened, waiting for international travel to come back, and with it the rich tourists who are their best customers.

As Britain moves through the stages of its roadmap towards reopening the economy, there is growing evidence that it will come too late for many businesses. A report this week said that more than 720,000 businesses are in “significant financial distress”, with county court judgments against them for unpaid debts or a dramatic deterioration in their financial position.

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‘Zombie businesses’

Julie Palmer from Begbies Traynor, the insolvency company that published the data, said a dam of "zombie businesses" could be about to break as government support proves inadequate to keep them afloat.

“Opening the doors of consumer-facing businesses on April 12th may well seem like a big step in the right direction for many of these companies as they try to shake off the traumatic trading of the last 12 months. However, our experience shows that unmanageable levels of debts and subsequent overtrading are likely to be the hidden icebergs waiting to sink even the highest-profile businesses,” she said.

The withdrawal of government support in the autumn will leave many companies exposed to the full scale of their debt and Britain’s insolvency rate is likely to rise by 50 per cent, the company said.

It is not just businesses that have been taking on more debt during the pandemic but households too, according to the Resolution Foundation, a think tank focusing on people on low and middle incomes. In a study comparing the financial resilience of households in Britain, France and Germany, the foundation discovered that 17 per cent of people in Britain whose incomes fell during the pandemic took on debt to cover living expenses, compared with 9 per cent in Germany and 8 per cent in France.

The study cautions against the assumption that money saved during the pandemic because of restrictions on eating out, going to bars and other forms of social consumption will be available for a shopping spree now that the economy is reopening.

Low-income households

“While this pent-up consumption for some is reason for thinking that spending can recover quickly as lockdown restrictions are eased, this picture masks more worrying developments among those who have experienced an income shock,” it says.

British households on low incomes entered the pandemic with more non-mortgage debt than their French and German counterparts and they will struggle more to overcome the impact of job losses or reduced wages. This is because welfare payments in Britain are less generous and more short-lived than in France and Germany.

If those on low and middle incomes in Britain lack resilience, the poorest have been more vulnerable than ever during the pandemic. A record 2.5 million food parcels were given to people across Britain over the past year, with almost a million going to children.

The Trussell Trust, which runs Britain’s biggest network of food banks, said it experienced a 33 per cent increase in need during the pandemic. It said the people who needed food parcels, including emergency parcels with enough food for one person for three days, were simply destitute.

“Hunger in the UK isn’t about food, it’s about people not having enough money for the basics and, with high rates of unemployment and record redundancies, more people than ever need the social security system to provide a strong enough lifeline to stay afloat,” the charity said.