Retail job cuts at worst level since last financial crisis

Retail employment fell at the fastest rate since February 2009, in the year to August, as the economic impact of the Coronavirus took hold.

As survey of 128 businesses, of which over half were retailers from the Confederation of British Industry (CBI), showed that employment in the retail sector fell by 45 per cent, from a 20 per cent fall in May, registering the sharpest decline since the height of the financial crisis.

The survey also found that retailers expect job cuts in the sector to spike even further in the next quarter, potentially falling by 52 per cent.

The data also found that for the month of August retail sales were, on average, 27 per cent lower than in ‘normal’ conditions. However, this represented a significant improvement on the last time this question was asked in June, when sales were found to have fallen 79 per cent.

Internet sales grew 46 per cent, at a pace broadly in line with the long-run average (45 per cent), with a similar rise expected next month (48 per cent) as consumers continued to shop online, even after lockdown eased.

Despite the gloomy data, retailers expect a moderate improvement in the business situation in the coming quarter, with a forecast of seven per cent, compared to a fall of 33 per cent in May.

Alpesh Paleja, lead economist at the CBI, said: “The furlough scheme has proved effective at insulating workers and businesses in some of the worst-hit sectors during the pandemic, but these findings reinforce fears that many job losses have been delayed rather that avoided.

“Indeed, the latest survey shows that trading conditions for the retail sector remain tough, even against the backdrop of business slowly returning - firms will be wary of deteriorating household incomes and the risk of further local lockdowns potentially hitting them in the pocket for a second time.”

As a result, he concluded that “further support may well be needed for the retail sector if demand continues to disappoint", adding that extending business rates relief would go a long way towards alleviating pressure on retailers’ cash flow.

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