It’s starting. Slowly the names of high street retail brands are appearing in our news feed. Headlines like “High street retailers call in administrators” are going to get more prolific. To date, the leadership of New Look, Debenhams and Cath Kidston have announced they are struggling during our economic and social lock-down.
Different Shops, Same Effect?
New Look is not in such a bad state, having only ceased production and asked all of its 13,000 employees to stay at home, unpaid (retailgazette.com). Granted, they will now be able to access the 80% salary grant from the government.
Compare this with the likes of Timpson, who closed their stores and are paying their 5,500 staff full wage during the crisis (theguardian.com). The Timpson Group are renowned for the care they give their staff. Staff are able to hire the company’s seven country home retreats for their personal use, get their birthdays off, access to a hardship fund and a final pension salary scheme (thisismoney.co.uk).
Covid 19 doesn’t just take human lives in the biological sense; as businesses atrophy and die, more people will be made redundant, more manufacturers will have to scale down their enterprises, more people will lose their jobs. People will struggle to pay bills, pay mortgages, pay rent. The mind boggles at the ramifications as the ripples extend ever outwards from this century-defining catastrophe.
But a bleak outlook shouldn’t deter us from learning from this disaster. I have to confess, I was shocked at how quickly these giants of retail had to call in administrators. I was expecting large brands to suffer (the struggle high street stores have faced has been discussed at length in the news in recent years), but I am really surprised at how relatively fast these announcements have come.
A few years ago, a new acquaintance told me about a really traumatic personal event that she was going through. It was unravelling her life, every area was being changed by what she was going through. My instant response was compassion and horror when I learned the details of what was going on.
After the initial shock subsided, one of my questions to her was, how on earth are you coping at work? My friend owned and ran a successful small marketing company; she had built it up from nothing and it was a source of great pride for her. Obviously, being a business owner required an enormous amount of emotional, physical and mental effort. How could she cope with this and her personal suffering at the same time?
Her answer always struck me. She told me that she always saved enough money in the bank to run the business for six months without any cash flow. She could pay all her staff full wage, her rent, rates and utilities for six months because she had determined that she wouldn’t take any money out of the business for the first few years of operating. As she told me “you just don’t know what life is going to throw at you.”
Her realistic, life-grounding wisdom really impressed me. It wasn’t pessimistic, it was pragmatic. As she had to re-organise her life, her previous caution was paying-off.
A Lesson for Big Business?
There are some very large retailers that are announcing the are struggling way to quickly during this crisis for them to have stewarded their cash-flow wisely recently. You can forgive small, one or two-man band businesses their infancy for living hand-to-mouth, but surely larger retailers should have contingencies for tough times?
Maybe I am naive? Maybe I have an overly cautious approach to running a business? But I do strongly feel that a good business owner should take into account that they employ people who rely on their wage to feed their children, pay their mortgage and keep the heating on. There should be at least be enough in the business to pay your employees at least one months wage to give them some chance of finding another job before their salary stops?
Who knows that the retail landscape will look like as we emerge from this crisis? But, moving forward, my friend’s wise financial action has resonated with me in a way never before. Surely, the least we can take away from this tragedy is a desire to nurture our businesses into a position where we can take care of those who work so hard for us?