Within hours of each other, both Debenhams and Arcadia Group, who owns brands such as Topshop, Burton and Dorothy Perkins, announced their huge financial troubles.
Debenhams has been in administration since April, but this week the hopes of its survival were dashed when the final bidder, JD Sports, withdrew from bidding. This means the doors of this 242-year-old retailer will likely close and its 12,000 employees will lose their jobs.
Whereas Arcadia has announced they have called in the administrators, Deloitte, this week, meaning the jobs of their 13,000 employees could also be at risk, but no redundancies have been announced so far. Unlike Debenhams, Arcadia’s brands will continue to trade until the administrators find a solution for the group’s financial problems.
The announcement from both retail giants come as the second lockdown in England was lifted and non-essential stores could reopen. This meant that employees of these retailers returned to work after being furloughed only to find out that they may be losing their job. The pandemic and the lockdowns, which meant the forced closure of non-essential shops, are being held responsible for the demise of these high street giants.
So what happens now?
For Debenhams customers, they can continue to shop online and in store, but no new stock will be coming in. Those who ordered items during the Black Friday and Cyber Monday sales are expected to still receive their orders and be able to return them within the normal return period. Also gift cards at Debenhams can continue to be used as a payment method until the business is sold.
The website is trading as usual and stores will be open in line with local Government guidance. We are currently experiencing high demand through our website. We apologise for any wait time and thank you for your continued support https://t.co/DOuro5x3j8 pic.twitter.com/rhQh9NmKp7
— Debenhams (@Debenhams) December 2, 2020
Arcadia brands will remain open and all orders made over the Black Friday weekend will be honoured. However, the websites of their brands have not been accepting gift cards as a valid payment method since the administration announcement on Monday. Now it has been announced, on 3rd December, that customers may only use gift cards for 50% of their order, when the websites are back up and running, or for 50% of purchases in store. Money Saving Expert is urging shoppers to use their vouchers as soon as possible, as they could become worthless, if administrators decide to no longer accept them as a valid payment method.
But what does this mean for the rest of the high street?
These announcements are undoubtedly causing worries for other high street brands, because if huge high street names like Debenhams or the brands of Arcadia can’t survive, what will happen to smaller chains? How will they endure the pandemic and retail crisis it has caused if the biggest brands can’t? More and more retail employees’ jobs could also be at risk if businesses don’t bounce back after lockdown and customers might have to shop online permanently if there are no more physical stores. Currently, consumers have been forced to shop online because of the lockdown restrictions, but they may also have chosen to in order to prevent themselves from coming into contact with other shoppers, who could have Covid-19, and this may continue into 2021.
This forced shift online and also the preference of shopping from your home could be the beginning of the end of the British high street.