UK Could Lose 400,000 Retail Jobs as Pandemic Accelerates Shift to Online Shopping: Report

A pedestrian wears a mask as he walks past "Store Closing" signs in the window display of a Debenhams store in Manchester, northern England, on Dec. 2, 2020. Paul Ellis/AFP via Getty Images

UK towns and cities could lose nearly 400,000 jobs and up to 40 percent of their retail offerings as consumers shift to online shopping due to the impact of the pandemic, a new KPMG research report reveals.

“Online sales have grown by 50 [percent plus] in nine months, accelerating a trend that would have taken five years plus to deliver in normal circumstances,” Paul Martin, head of retail at KPMG in the UK, said in the report published on Thursday.

Forty to 50 percent of all non-essential retailing is expected to shift online going forward, an increase from 30 percent before the pandemic.

This accelerated rise in online shopping could affect up to 5 percent of the local labour force.

Basingstoke, Bracknell, and Guildford have been identified as the most severely impacted areas and with the highest risk of job losses. Up to 2,602 jobs could be affected in Basingstoke, representing 3.8 percent of total employment and 39 percent of total retail jobs.

London is estimated to lose 122,146 retail jobs, accounting for 2.3 percent of the total workforce and 30 percent of retail jobs.

Larger cities such as London, Birmingham, Liverpool, and Manchester could show more resilience as they have larger and more varied cultural offerings to attract visitors, which may offset the impact of less commuter flow and the loss of retail offerings.

People walk past an entrance to the Topshop store at the Oxford Street, in London, on July 2, 2020. Hannah McKay/File Photo/Reuters

Business for retailers across the UK has been in decline for some years, and the pandemic has worsened the downturn, especially for non-essential shops.

Sir Philip Green’s Arcadia Group, which owns major brands including Topshop, Dorothy Perkins, Burton, and Miss Selfridge, went into administration at the end of last year, putting 13,000 jobs at risk.

The UK’s oldest retail chain Debenhams confirmed on Wednesday that it will shut six of its shops, including its flagship store on Oxford Street in London. The company went into liquidation last December, affecting 1,300 jobs.

The pandemic has also had a mixed impact on UK property values, with retail and hospitality properties suffering the biggest fall.

“December 2020 retail property valuations could be somewhere around 50 [percent] of the previous peak, and in some cases much lower, with 2021 bringing further reductions in non-food retail property valuations,” Andy Pyle, head of real estate at KPMG UK, said.

Earlier this month, Chancellor of the Exchequer Rishi Sunak offered one-off top-up grants for retail, hospitality, and leisure businesses worth up to £9,000 ($12,225) per property as part of the extra £4.6 billion support package for businesses hit hard by the CCP (Chinese Communist Party) virus lockdown measures.

While the grants may help retail shops to survive the downturn, customers may not return to the old ways of doing things post-pandemic.

“The high streets of the future will need to become multi-purpose locations, combining retail and hospitality amenities with residential, education, healthcare, cultural, technology, community and more,” Yael Selfin, chief economist at KPMG UK, said.