John Lewis and Boots have become the latest in a growing list of retailers closing stores, cutting jobs and restructuring as the impact of the coronavirus lockdown hits the retail sector. The news comes just a day after chancellor Rishi Sunak announced a £30bn plan aimed at saving UK jobs.
John Lewis will now not reopen eight of its 50 department stores, including two of its biggest shops in Birmingham and Watford, with the possible loss of around 1,300 jobs. All four of its smaller At Home-branded locations will close, as well as two travel outlets at Heathrow and St Pancras.
While the shops that are closing were “financially challenged” before the Covid-19 crisis, the pandemic has accelerated those issues. Before coronavirus, around 40% of John Lewis’s sales were online but it now expects that figure to be between 60% and 70% both this year and next.
The John Lewis Partnership (JLP), which owns both John Lewis and Waitrose, is prioritising ecommerce investment to cope with that shift and the company hopes some shop staff may be able to transfer to its online operations. Waitrose, for example, has doubled its online capacity since the pandemic began and expects this to grow further with a third online fulfilment centre opening.
Further investment in John Lewis’s online business is also planned. JLP is set to hear the results of a major strategic review into the future success of the business later this month. But more actions may need to be taken after profits fell 65% in January and its annual bonus dropped to the lowest level in decades.
JLP has already cut around a fifth of head office staff, including some in marketing.
Despite the gloom, JLP chairman Sharon White believes there are still reasons to be “optimistic”. She points to the strength of the John Lewis and Waitrose brands, as well as the organisation’s ability to adapt to the new needs of customers.
She adds: “There are many reasons to be optimistic about the Partnership’s future. Waitrose and John Lewis are two of the UK’s most loved and trusted brands, and we have adapted to the challenges of the pandemic by responding to the new needs of customers. We will soon announce the output of our strategic review which will ensure our brands stay relevant for future generations of customers.”
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Elsewhere, Boots is launching a “significant” restructuring of its head office and store teams that it believes will result in a reduction in its headcount of more than 4,000 (or 7% of its workforce). It has not ruled out some of those jobs being in marketing.
The retailer has also been hard hit by Covid-19, with like-for-like sales falling by 48% in its third quarter, and 72% at its opticians business. While its pharmacy and healthcare services have been in high demand during the pandemic, its higher margin beauty and fragrance sales have been hit.
It, too, will be investing in online having experienced a 78% increase in online sales during the pandemic. And Boots believes the strength of its brand can position it for future growth, after seeing patient and customer satisfaction scores reach their highest ever levels, according to its internal tracker.
Boots UK managing director Sebastian James says: “The proposals announced today are decisive actions to accelerate our transformation plan and allow Boots to continue its vital role as part of the UK health system, and ensure profitable long-term growth. In doing this, we are building a stronger and more modern Boots for our customers, patients and colleagues.
“I am so very grateful to all our colleagues for their dedication during the last few challenging months. They have stepped forward to support their communities, our customers and the NHS during this time, and I am extremely proud to be serving alongside them.
“We recognise that today’s proposals will be very difficult for the remarkable people who make up the heart of our business, and we will do everything in our power to provide the fullest support during this time.”
The job losses at two of the high streets biggest names are just the latest to hit the retail sector as it struggles amid the economic fallout from coronavirus. Retailers ranging from Harrods to Topshop to Poundstretcher have announced redundancies, while brands such as Oasis and Warehouse have fallen into administration.