Smiling through tiers: Retailers pin hopes on ‘busier December’ as lockdown lifts

Hancock’s role was a tough one. On the one hand, he insisted that the tiered restrictions have been beefed up to better contain the virus and save lives. On the other, he had to allay the anger of an increasingly vocal wing of his own Conservative party, who disagree with the measures, and industry groups who fear vast swathes of the economy will not survive to see the arrival of vaccines in the spring. 

Hancock and the government also had to ward off growing criticism from the scientific community about the rationale behind its plans to relax restrictions across much of the country between December 23 and 27. 

While no retailer is expecting Christmas to be anything like normal this year, businesses are growing increasingly optimistic about how it will play out.

Quiet confidence

Crucially for retail, all non-essential shops are allowed to open when England returns to tiered restrictions from December 2. Other high street operators such as hairdressers, gyms and places of worship will also be allowed to reopen. 

Waterstones chief executive James Daunt sums up the mood of the sector: “Well, I can tell you being open is a damn sight better than not being open,” he says. 

Daunt believes there will be plenty of demand for physical retail in the lead-up to Christmas and predicts: “Once we are all open again, people will be spread out more equitably and that generally must be a good thing. And we will all get busier as December progresses.”

Marks & Spencer has also welcomed the easing of restrictions on non-essential retail, with a spokeswoman saying the reopening of non-food sections within stores will have a positive effect on sales in the run-up to Christmas. 

”Being a retailer with stores across England and the devolved nations, we’ve become very flexible and agile at working with the various restrictions as they’ve been introduced,” she says.

”Obviously we welcome the chance to reopen our clothing offering in stores from Wednesday. Having our full offer available in stores will allow our customers to plan their spending ahead of Christmas.

”Our Sparks Book and Shop [shopping reservation tool] has had great take-up with over 127,000 reservations already, and we’re also going to extend our opening hours to midnight across 400 of our stores.”

“The drop in footfall in the second lockdown was nowhere near as pronounced as in the first. People are still going out and I think they’re desperate to get some activity and interaction”

Diane Wehrle, Springboard

Just as the take-up of M&S’ Book and Shop service suggests, Diane Wehrle, marketing and insights director at footfall specialist Springboard, predicts there will be high demand from customers when stores are allowed to reopen.

“Once stores reopen, I do think you’re going to see a lot of pent-up customer demand,” she says.

“The drop in footfall in the second lockdown was nowhere near as pronounced as in the first. People are still going out and I think they’re desperate to get some activity and interaction.”

Such cautious optimism is shared by other retailers, including Poundland. 

The value chain worked with YouGov on a survey that found more than two-thirds of consumers want to buy gifts and food in stores during December.

The data also suggested that 43% of Brits plan to spread their Christmas spending out over a broader period than usual this year, while 45% of the 2,000 consumers surveyed said they would not cut back on their festive spending, despite the pandemic.  

A Poundland spokesman said that a relaxing of the rules around Christmas and the impact of government schemes on protecting many workers’ incomes offered other reasons to be confident. 

“You’ve obviously had people on furlough and many people still working. There’s also been less to spend money on – people haven’t been going away, people haven’t been going out to hospitality venues. There’s going to be money to spend and I think people will want to treat themselves a little after the year we’ve had.”

Sales predictions by Mintel would appear to support that view. The market research firm has forecast that retail sales in November and December will hit a combined £81.7bn – just 0.4% down on 2019 levels. 

While food sales will account for the majority of that, Mintel still expects non-food sales to exceed £33.3bn. 

Down the drain

While hopes of a good Christmas are therefore building among retailers, the same cannot be said for those in the embattled hospitality sector, which has been hit hard by the new restrictions. 

In tier-two regions, pubs and restaurants can only serve alcohol “with a substantial meal” and households are not allowed to mix. In tier-three areas, pubs and restaurants are not allowed to open at all. 

Given that more than 55 million people in England will be placed under tier-two or tier-three restrictions from Wednesday, the impact on pubs, bars and restaurants will be devastating, according to UK Hospitality boss Kate Nicholls. 

“The hospitality sector is desperate to get staff back to work, open their doors and, in the long term, diminish reliance on the public purse and begin driving economic recovery”

Kate Nicholls, UK Hospitality 

“The new tier system will deliver another huge blow to hospitality, with 98% of trade now happening in tier-two or -three regions. This will see £7.8bn of trading wiped out compared with last year if the restrictions last all of December,” she warns.

“These are safe spaces for people to meet, relax and socialise, and the sector is desperate to get staff back to work, open their doors and, in the long term, diminish reliance on the public purse and begin driving economic recovery.”

Mayor of the West Midlands and former John Lewis managing director Andy Street agrees. Much of Street’s constituency has moved up at least one tier since the national lockdown began, with Birmingham and much of the West Midlands poised to enter the most severe level of restrictions.  

“While people might disagree with this non-negotiable decision, what is now critical is to ensure the region moves out as safely and quickly as possible,” he says.

“Given the trajectory our rate of infection is on, I am hopeful it won’t be long before we see a shift to tier two.”

Street insists that until then the affected high-street businesses in his constituency need more financial support from the government, plus proof that closures are actually preventing the spread of the disease. 

“There clearly needs to be further economic support to help mitigate the damage that tier three brings – particularly to the hospitality and conference/exhibition sectors,” he says.

“Away from the financial support, the government also needs to provide clear epidemiological evidence as to why the hospitality sector is forced to close in tier three.”

Springboard’s Wehrle believes pub and restaurant closures in tier three will have a knock-on effect on high street footfall. 

“You’re going to see less people on the street in tier three areas,” she says.

“Dwell times will be shorter because, unless you’re going into a store, where else is there to go? You can’t go anywhere and have a meal or coffee and those are the elements that encourage people to stay longer in retail destinations.”

“You only have to walk down high streets at the moment to see the cataclysmic effect of closures and we haven’t even begun to get to the end on that”

James Daunt, Waterstones

Although he is optimistic about how Waterstones will trade amid such challenges, Daunt harbours concerns about the future for independent high street businesses. 

“You only have to walk down high streets at the moment to see the cataclysmic effect of closures and we haven’t even begun to get to the end on that,” he says. 

“The people who are going to come through this are the kind of business that I run. We’ve got enough scale and we’ve got a website. So, actually, we’re all right. But what about the candlestick-maker next door to us? They’ve been totally screwed by all of this.”

For many retailers, the lifting of national lockdown and the reopening of non-essential stores brings some early festive cheer.

Christmas may be merrier than most had feared just a few weeks ago, but a happy new year might be out of reach for other parts of the high street.