Shop worker, cuts

Shop worker, cuts   (Click to enlarge: opens in new window)

Iain Dalton, vice-chair, Usdaw Leeds private trade branch (personal capacity)

Toys R Us plans to close a third of its stores. Asda wants to downgrade hundreds of shopfloor supervisors. Britain’s largest tobacco distributor Palmer & Harvey has gone into administration.

These recent announcements will ring alarm bells for retail workers worried for their futures amid signs that consumer spending in general is slowing down.

The closure of at least 26 Toys R Us outlets threatens 800 jobs. Asda’s pay cut would affect 842 ‘section leaders’. And the administrators have already made 2,500 Palmer & Harvey staff redundant, with a further 900 threatened.

The Toys R Us closures are partly due to large store sizes becoming less competitive after the rise of online shopping. But both Toys R Us and Palmer & Harvey have had problems with suppliers.

The tobacco distributor struggled to receive payments in time to pay down debt obligations. And some of the toy shop’s suppliers were unable to get ‘credit insurance’ for providing goods on account.

Consumer spending fell 2% this October compared to last, according to Visa. That’s the fifth monthly drop in the last six months, and included a 5% drop in high street spending. This reduced income will affect most those companies which are heavily indebted.

Like the run-up to last year’s collapse of department store BHS, a management buyout of Palmer & Harvey left a wake of suspicious dealings. The 2008 takeover was leveraged with debt which reached a net amount of £48.6 million in April 2016.

Yet since the buyout, the Guardian estimates there has been around £70 million in shareholder payouts. Former chairman Christoper Etherington and his wife will have received about £2.5 million in dividends since 2009 alone.

Usdaw

The BHS collapse meant the loss of a high street icon, and the jobs of many members of retail and distribution union Usdaw. So the 2017 Usdaw conference passed a resolution to call on the government to bring companies in a similar situation into public ownership.

The union has made two statements on Palmer & Harvey on its website so far. But nowhere in either does it call for nationalisation. Instead the administrator, financial services giant PwC, has been allowed to sack 2,500 workers unanswered.