Arcadia is a figurative region of rural contentment. Perhaps no other business has been so inappropriately named as Arcadia Group, which owns Topshop, Burton and Wallis. This week it is likely to enter administration, offering a cautionary tale. Sir Philip Green, Arcadia’s driving force, used cost-cutting to boost profits. Financial engineering saw a £1.2bn tax-free dividend paid to the Green family in 2005. But there was little innovation. Arcadia lost ground to high street and online rivals. Sir Philip became embroiled in unseemly rows with the pensions watchdog over Arcadia’s retirement fund and his behaviour towards employees. More than 13,000 jobs could go in the biggest retail collapse of the pandemic so far.
The demise of Arcadia threatens to sink a rescue deal for a struggling Debenhams. These two occupy 600 stores and employ about 27,000 people – more than the fishing industry that the prime minister wants to protect. Yet there’s no rescue planned for the high street. Familiar names such as Monsoon, Accessorize, Laura Ashley, Oasis and Warehouse have gone under this year. Analysts say almost a quarter of a million people will lose their jobs as 20,000 stores close, with women disproportionately affected. This will be a bleak Christmas for many families. Though the high street giants must take their share of the blame, it is an emergency that the government needs to address. City and town centres rely on shops for a sense of place. Retail is a vital source of work in every community, providing one in eight jobs and accounting for more than a tenth of Britain’s economic output, according to a 2018 TUC report.
As spending moves from physical stores to the internet, the amount of work and person-to-person contact involved in shopping wanes. Only about a minute of human labour goes into the average Amazon parcel: its plans to recruit 8,000 more workers won’t make up for the tens of thousands of high street jobs lost. Whether online or offline, owners win big while workers lose out. E-commerce executives this month raked in the largest payouts in UK corporate history. Many bricks-and-mortar retail jobs are low-paid, particularly for young workers. But they offer human contact and a ladder to the top. Tony Hoggett, the chief operating officer of Tesco, began his career stacking shelves, and noted in 2017 that his is “one of a handful of industries where it’s still genuinely possible for people to progress from the shopfloor to the boardroom”.
Coronavirus is a reckoning for the retail trade, with profound effects for the economy. As big names go under, landlords face rent shortfalls that could drag down asset prices. Creditors will be staring at big losses. This unsustainable mix of trends is coming to a head: job cuts lead to income reductions and then spending drops. Workers cannot load up with ever increasing levels of debt. Demand for goods and services will fall. The government must show leadership by setting a policy framework that is conducive to good jobs, with effective tech oversight and proper corporate accountability. It might be too late to stop the Green family sloping off in a yacht, but checking irresponsible behaviour in business ought to be part of the ministerial brief.
