Economy

Consumer Switch To eCommerce Prompts UK Retailers To Slash Jobs

Retail employment in the U.K. has dropped 45 percent since May in the sharpest fall it has taken since the 2009 recession, the Confederation of British Industry (CBI) reported.

And worse could still be to come.

According to CBI, internet sales seem to be encroaching on regular physical retail, with U.K. internet sales rising 46 percent in the year through August. Those sales are expected to keep rising, predicted to be around 48 percent in September, the CBI report stated.

Retail sales fell 6 percent in the year to August, and are expected to fall even more, by about 17 percent, next month. Retailers, according to CBI, are optimistic about the situation improving moderately over the next several months, including a 7 percent gain. That's an improvement over May when they expected it to fall 33 percent.

Retail traffic fell almost 60 percent in June, although analysts said the reopening of nonessential shops did do its part to help boost traffic from what the number could've been.

The survey featured 63 retailers among its 128 respondents. The decline in the economy could be seen over most sectors, with only grocery, furniture and carpet sales seeing improvements, CBI reported.

Orders reportedly fell this month with a drop of 27 percent. Next month, they're expected to fall 26 percent. And stock levels are at their lowest levels since March with only a 19 percent gain.

CBI Lead Economist Alpesh Paleja said the government's 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," the report stated.

"Indeed, the latest survey shows that trading conditions for the retail sector remain tough, even against the backdrop of business slowly returning," Paleja said in the report. "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, further support may well be needed for the retail sector if demand continues to disappoint. Extending business rates relief will go a long way towards alleviating pressure on retailers’ cash flow."

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