Reopening to Hasten U.K. Retail Shift From City Centers

(Bloomberg) --

When Britain’s lockdown finally ends, people wishing to spend will likely have to head to out-of-town malls first rather than their local shopping streets.

In news that could put further pressure on Britain’s struggling downtown retail districts, Next Plc and Dixons Carphone Plc said they plan to reopen their larger stores first.

These outlets, mostly outside urben centers, can be reopened more easily as they have more space for social distancing and large parking lots to accommodate customers waiting to shop. Bigger stores typically stay open longer, too, reducing the number of customers at any one time.

Clothing chain Next will “be better able to manage and monitor safety measures in a small number of large stores, than a large number of small stores,” Chief Executive Officer Simon Wolfson said in a statement.

Britain’s retailers are preparing blueprints for reopening stores that have been shut since mid-March amid the coronavirus pandemic.

As lockdown effects linger, the impact on business will be greater than initially expected, Next said. Full-price sales could fall as much as 40% this year, it said, and even in a best-case scenario, they’ll be down 30%. The shares traded 1.7% lower at midday in London.

Some retailers, which typically operate on small margins, may decide not to reopen all of their shops when the lockdown ends. Stores that are difficult to operate profitably and safely will be in focus, with smaller shops in central districts particularly vulnerable.

John Lewis Parternship Plc is keeping its plans under review, a spokeswoman said, after U.K. media reports that the retailer is considering whether it needs to reopen all 50 of its department stores once the lockdown ends.

Even before the pandemic, central retail districts were struggling to survive as foot traffic fell and more shopping was transferred online, a move likely to have been hastened by the pandemic. Consumers have grown more comfortable with online shopping “and some of that behavior will stick,” Dixons Carphone CEO Alex Baldock said.

“I think social distancing among shoppers will go on past the point when it is still mandated by government as people will still be nervous,” the electronics retailer’s chief said on a call.

©2020 Bloomberg L.P.