A sobering distillation of the Amazon effect on retail was offered by economist Paul Krugman this week.
“Department stores employ a third fewer people now than they did in 2001,” the Nobel laureate wrote. “That’s half a million traditional jobs gone — about 18 times as many jobs as were lost in coal mining over the same period.”
Krugman was describing the employment picture in the US on the back of Sears’ expression of “substantial doubt” about its ability to stay in business and news that Macy’s was to close 68 stores and lay off 10,000 workers. In drawing a parallel with mining, he also picked a political football of a sector to grab attention. It worked.
His is a parallel that holds for department stores on this side of the pond too (p31). On Thursday, Debenhams said it would close one of its central distribution centres, 10 smaller regional warehouses and as many as 10 stores as part of a strategy to turn the business around. “Debenhams redesigned” is its new strategy.
It is far from the only chain redesigning. Earlier in the week Chinese-owned House of Fraser said it was planning to upgrade its stores to give them a more “lifestyle-led” experience.
Neither are department stores the only branch of retail under pressure. It is perhaps most acute in the secondary market. One investor said this week that risk was so high at this end of the sector that the pricing gap between buyers and sellers was killing deals.
Portfolio reconfiguration will be expensive and will take time. But with Amazon and other retailers able to reconfigure their offer with little more than a click, time right now is in even shorter supply than customers on a department store’s upper floors.
■ There’s a general election looming in case you hadn’t noticed. But we shouldn’t delude ourselves that this sector will be a key battleground (p27).
Less than 18 months ago, housing led the prime minister’s new year agenda. Today it, and the other issues that affect this sector, have been overtaken by Brexit. That won’t change in the next two or more years.
But at a local and regional level – where elections are less than two weeks away – it is very different. A politician’s first obligation is to get him or herself elected. Granting (or, less commonly, denying) planning permission can be an impediment to that. The fresh cohort of mayors set to be elected will also have strong views on development in the months ahead.
While accepting that housing won’t get the attention it deserves at a national level for the foreseeable future, I will strike one note of caution.
Housing minister Gavin Barwell is seen as the first postholder for some time to truly get the sector. With a ministerial reshuffle sure to follow Theresa May’s all-but-certain return to Number 10, will he be moved on and up? It’s possible, perhaps probable. Let’s hope he gets to serve a second term on his brief too.
■ I’m sure many of you spent the Easter holidays finalising your EG Awards entries. For those who didn’t, I can offer comforting news: we are extending the deadline to
Friday 5 May. Get in touch with carly.mcgowan@egi.co.uk if you want to take advantage of the extension. And if you are looking for some tips on how to win over our judges, do watch our how-to video at www.egi.co.uk
