Yorkshire's retail sector faces 'make or break' Christmas as cash reserves run dry

The beleaguered Yorkshire retail sector faces a "make or break" Christmas, amid fears many businesses may not survive the coming months after seeing their cash reserves run dry during the pandemic.

Experts say the future for the high street is "in the balance" in the run-up to the crucial trading period after a year when footfall in the region's town and city centres has fallen by more than half.

And in the new year they face the dual threat of rent and business rates being due after a period of lockdown, combined with the end to the moratorium on debt enforcement measures which came in at the start of the pandemic.

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The Government says it is committed to supporting the retail sector and has provided Yorkshire businesses with £1.3bn through the pandemic through the Small Business Grant Fund and the Retail, Leisure and Hospitality Fund.

But Labour estimates that more than 70,000 small businesses in Yorkshire do not have cash reserves to last beyond three months, with the vast majority getting much smaller grants during the latest lockdown than they did in March.

The party estimates this could mean 3,690 hairdressers and beauty salons, 530 butchers, 85 toy shops, 240 greengrocers and 70 bookshops are at risk in communities across Yorkshire.

Fears for the retail sector have been heightened by the collapse of the Arcadia Group and Debenhams this week in a development which some say will "rip the heart out" of many high streets across the country.

Christmas shoppers in Halifax..Shoppers outside Marks and Spencers...3rd December 2020. Pic: Simon Hulme

While many smaller independent retailers have successfully adapted to changing habits and moved much of their offering online, bigger chains have suffered after being slow to respond.

Olga Munroe, Head of the Retail Institute at Leeds Beckett University, said: "Unfortunately we're going to see a lot of high streets diminished. There'll be a lot of further, I imagine, bankruptcies in the high street which had been coming our way for some time."

Though many retailers have reported strong sales since re-opening after lockdown this week, they face the longer term challenge of reduced footfall. Even when restrictions were lifted this summer, the number of people coming into Leeds was down to 40 per cent of pre-pandemic levels and in Bradford around 60 per cent.

Susan Hinchcliffe, the leader of Bradford council and chair of the West Yorkshire Combined Authority, said the situation for the region's "retailers, both big and small, national chains and independents, is getting critical".

She added: "The next few weeks of the Christmas trading period will be make or break for many of them. Based on national trends, about 2,700 wholesale and retail businesses don’t think they’ll survive the next three months. Many of those with physical premises are running out of cash and have bills, rents and rates to pay."

Stephen Bethal, Corporate Affairs Director at the British Retail Consortium, said that with one eighth of retail sales done in December, retailers were "banking on a good Christmas".

He said: "There's that threat of debt enforcement measures on unpaid rent and then the full business rates liability in April, those are cost pressures that the industry could struggle to bear."

A government spokesperson said: "We are committed to supporting the retail sector in Yorkshire and are working closely with industry during these challenging times, including through our unprecedented package of business support worth £280 billion.

“Since the pandemic started, we have provided Yorkshire businesses with £1.3bn through the Small Business Grant Fund and the Retail, Leisure and Hospitality Fund, as well as £63m through the Local Authority Discretionary Grant Fund.

"The Government has made additional payments totalling £195m to Yorkshire to support businesses impacted by the introduction of local restrictions from August, and the 27 day national restrictions which started on 5 November.

“We stand ready to support anyone affected by redundancies. If people need financial support quickly they may be able to claim Universal Credit, new style Jobseeker’s Allowance or Employment and Support Allowance.”