Hotels and restaurants have been hit by a wave of cancellations as new coronavirus restrictions throw the country’s Christmas celebrations into doubt and raise the prospect of a fresh setback for the high street.
If new rules banning gatherings of more than six people remain in place over the festive season, analysts say, the absence of Christmas parties and big family get-togethers could cost retailers billions of pounds in lost clothing and food sales.
“I think that this could reduce retail spending by billions,” said independent retail analyst Richard Hyman. “Toys and presents will obviously be bought, but I think clothing sales will be hit.”
“Clothing retailers need the fillip that is triggered by going to parties and family gatherings, and that’s clearly going to be very significantly curtailed. Why bother [buying something new]?”
The festive season is when many retailers bank the lion’s share of their annual profits, and many stores are desperate to make up lost ground after being forced to close their doors for months during the lockdown.
The weeks of frenetic socialising in the run-up to Christmas and new year are also extremely important to Britain’s pubs, restaurants and hotels. Some venues bank as much as 40% of their annual profits between Halloween and January.
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Kate Nicholls, chief executive of UKHospitality, the industry trade body, said its members had experienced an immediate drop in bookings, with tables even cancelled for Wednesday night after Boris Johnson announced the clampdown.
The new rules threatened to undo the work of the government’s recent “eat out to help out” scheme, which had encouraged Britons to venture out of their homes and helped rebuilt confidence in the sector, she said.
“The fear is that, having built momentum over August and brought back two-thirds of our workforce from furlough, consumers get nervous and feel they can’t go out,” explained Nicholls. “There was a very clear ‘Don’t socialise’ message [from the government].”
The new restrictions in England and Scotland pose a fresh threat not only to restaurants and pubs that had started to get back on their feet, but also to nightclubs, events venues and hotels, whose livelihoods rely on the large gatherings that have not yet been allowed to resume.
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“We’ve seen lots of cancellations already and then there’s the question of what it means for planning for the October to December period,” said Nicholls. “You have still got a million people whose jobs are being subsidised. Those employment levels are looking unsustainable unless you are able to guarantee that you can open.”
After what has been a year to forget for many people, Christmas was the one date people had to look forward to in their diaries. John Lewis opened its Christmas shop early after it found that searches for festive products had nearly quadrupled compared with last year. Last week online marketplace Notonthehighstreet said searches for “Christmas” on the gifting website were running at double last year’s level.
The usual Christmas shopping jamboree was already under threat owing to the recession and the financial uncertainty faced by furloughed workers as the government scheme is withdrawn. Retailers also face the headache of adhering to social distancing rules at a time of year when stores usually throng with shoppers.
The retail sector itself also remains in turmoil after the lengthy lockdown accelerated the transfer of sales from physical stores to the digital realm, contributing to a wave of store closures and administrations that has led to the loss of nearly 125,000 retail jobs.
While DIY and homeware retailers have reported bumper sales as the shift to working from home, coupled with cancelled holidays, sees consumers spend money on sprucing up their homes, fashion retailers in particular have struggled. With nowhere to go, consumers have shunned their usual wardrobe updates and the absence of Halloween and Christmas parties will provide another excuse to cut back.
“Clothing is the part of the retail sector that remains under the most amount of pressure by far,” said Retail Economics’ chief executive, Richard Lim. “There have been significant changes in consumer habits, we’re still not going out and socialising with the frequency that we were previously.”
Lim added: “It’s about the feel-good factor, and this year, perhaps more so than in any other year in living memory, Christmas is going to be hugely important for many households and families. But people will be nervous about these restrictions and the last thing that retailers need at the moment is to put a dampener on Christmas spirits.”