Pivotal moment for retail as Next shuts online operation

Following the decision by UK clothing retailer Next to shut its online operations down last night, Patrick O’Brien, UK Retail Research Director at GlobalData, a leading data and analytics company, offers his view:

“Next’s decision is likely to reverberate across the retail industry – and many warehouse workers at other retailers will question why they have not been furloughed to protect their safety. River Island, TK Maxx and other smaller players have also shut online operations, and as demand for fashion continues to fall we expect other retailers to follow suit, unless they can find a way to operate warehouses safely. Currently Marks & Spencer believes it can do this, but it and other retailers of non-essential goods will be under pressure from concerned staff.

“While demand for clothing and footwear will obviously be impaired by an isolating population, retailers were hoping that online could partly offset the absence of store sales for the three-week minimum period that non-essential stores have to be shut for.

“In the homewares sector, market leader Dunelm did temporarily shut its online operation but has reopened it for a limited number of items, having cordoned off parts of its warehouses, and implemented more detailed safety procedures. Some retailers may be able to make such adjustments as well. While both Dunelm and Next are strong enough to ride out the crisis, many others will fail if they are not able to operate online and stores are shut for longer than the initial three weeks.”

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