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The head of one of the UK’s most successful and resilient High Street chains has told the BBC that hundreds of thousands of traditional retail jobs may not survive in the wake of the coronavirus crisis.
Lord Wolfson, who runs the clothing firm Next, said there was a clear threat to thousands of jobs, which are now “unviable” because the closure has caused a permanent shift to online shopping.
“I don’t want to underestimate how difficult it is for a lot of people who work in retail, I think it’s going to be very uncomfortable,” he said.
His comments came just hours after the chancellor announced a new job support plan that would see the government increase the salary of people who cannot work full time.
But the government’s contribution to workers’ wages will drop dramatically compared to the leave scheme. Under license, he initially paid 80% of a monthly salary up to £ 2,500; With the new scheme, this will be reduced to 22%.
“We don’t think we need it,” Lord Wolfson said. “But we believe that there are other sectors that will desperately do it.”
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And while he welcomed the chancellor’s announcement, he said it was important that companies eventually learn to live without government support.
“Sounds like a very sensible plan to me,” he said. “I think it’s important that employers start paying a little more for the schemes and that employees get a little less, because otherwise I think there is a risk that our economy will get hooked on them.”
Next is considered one of the best run retail businesses in the UK and Lord Wolfson was confident that mandatory layoffs at his own business would be minimal and new jobs would be added in call centers and distribution centers.
“We believe that by the end of October, there will be enough work during the normal Christmas preparation period to employ all the people we are currently licensed,” he said. “We have less than 10% of our staff on (license) right now.” But he expressed fears for others.
Next’s sales have proven resilient compared to its rivals, even making a small profit during the first half of this year, thanks to its strong online business and strong retail park presence, which has regained popularity as shoppers avoided city centers and public transportation. .
So is downtown doomed?
“I don’t think so,” Lord Wolfson said. “But I think they are going to have to change and change in a very radical way.”
He wants change to come “from the bottom up”, driven by entrepreneurs. And he believes that releasing properties would be good for the country, especially if the government allows people to do what they want with those sites.
“The only thing we desperately lack in Britain is property, we don’t have enough space to live,” he said.
The value of downtown commercial properties is plummeting. Many tenants have been unable to pay their rent and have relied on government intervention to save them from landlord eviction.
But Lord Wolfson says that we should not be too quick to demonize homeowners, as their investment will be needed to create the High Streets of the future.
“If city centers and city centers are going to regenerate, it will only be with the investment that owners make in those properties.”
But he says the trust of those landlords would be damaged if tenants break their rental agreements.
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But one complaint he shares with his retail competitors is the growing burden of commercial fees, which he says have become increasingly divorced from the value of the properties for which they are charged.
“The rates have become unfair,” he said. “One of the great principles of taxes is that it should be proportional to your ability to pay. A gulf has opened between the rates that were being charged and the rates that we should be charging ourselves at a fair price.”
But that would leave a huge hole in the government’s finances. Should the government raise fees at online retailers’ warehouses and logistics centers?
“That is exactly what the government should do,” Lord Wolfson said. “Over the last six or seven years, the price of storage has increased dramatically and the price of stores has dropped dramatically, but both rates have remained exactly the same.
“So we thought that you could actually raise storage rates by 30% to 50% and that would make up for some of the loss and that would be fair.”
Brexi
Lord Wolfson was a prominent Brexitist, so what do you make of the dire warnings of thousands of trucks queuing up the roads of Kent, a chronic shortage of customs officials and potential chaos at ports as the UK leaves EU for real when the transition period ends in 97 days?
“There is a lot of speculation about what it will look like and I’m certainly not going to get involved in that kind of speculation,” he said. “All I can say is that we have worked very hard for over two years to make sure the company is ready to deal with all the administrative changes that will come with a no-deal Brexit.”
“I hope we don’t, but if we end up in that situation, certainly the business I work for will be ready.”
