Unions respond as high street shuts up shop


Retail union Usdaw has called for “a combined and concerted effort” to tackle the escalating crisis in the retail sector, as Boots became the latest household name to announce high street closures. The company’s announcement at the end of June that 200 stores would close by 2021 followed a series of collapses and rescues in the sector over recent months. 


A report by the Centre for Retail Research, Who’s gone bust in retailing 2010-19?, includes an examination of failures in the first part of this year, to 1 June 2019. 


They include department store Debenhams, which went into “pre-pack administration” on 9 April. This is where a company arranges to sell its assets to a buyer before appointing administrators to facilitate the sale. The move affected 165 department stores, more than 25,000 employees and thousands of concession staff.

Office supplies and stationary chain Office Outlet, previously named Staples, went into administration in March 2019 with 94 stores and 1,170 employees at risk.

And in mid-June, despite a rescue package to avoid administration that would have put 17,000 jobs at risk, Phillip Green’s Arcadia Group empire, which includes Topshop, Dorothy Perkins, Burtons and Evans, announced it would close 50 stores and cut 1,000 shop floor and 170 head office jobs. 


Usdaw says the crisis is unprecedented and describes the trading environment as brutal. According to figures from the British Retail Consortium (BRC), which represents the industry’s largest employers, 2018 saw the loss of 74,000 retail jobs. By April 2019, town centre vacancy rates had hit 10.2%, their highest level for four years. Yet there has been little in the way of meaningful government action, apart from the 2018 Autumn Budget. 


This included cutting business rates bills for small businesses by a third for two years from April 2019, saving them £900 million. It also set aside £675 million worht of funding to improve transport links, re-develop empty shops as homes and offices, and restore and re-use old and historic properties. 


The retail industry in England contributes around £7 billion worth of business rates annually, nearly a quarter of the total, and is the biggest private sector employer in the UK. But Usdaw says it was completely overlooked in the government’s industrial strategy, which chose to focus on other industries such as technology and infrastructure. 


And while several reports looking at the retail sector and high street crisis have touched on the impact on communities, it says they have failed to address how it is impacting on retail work and retail workers’ lives. 


Usdaw industrial stragegy for retail

In response, the union has launched its own Industrial strategy for retail as part of its wider Save our Shops campaign. The launch event in early June brought together trade unionists with representatives from the BRC, think tanks, retail analysts, journalists, campaigners and politicians. 


The strategy proposes “detailed and evidence led policies” and is centred on three areas. The first, “economy and community”, calls for changes to the economic framework on everything from car parking to rates, rents and reforming the tax system. 


The “people and productivity” strand looks at how to improve productivity by addressing low pay and insecure work, while giving staff a say in the future of the business they work for and on the introduction of new technology. 


The third strand, “retail jobs are proper jobs”, challenges perceptions about retail work and calls for a greater focus from government on the retail industry. It also aims to ensure that shopworkers are valued. 


A key focus of the economy and community strand is on the measures needed to create a level playing field between online and traditional “bricks and mortar” retailing, including fundamental reform of business rates and taxation. 


“Usdaw knows, and we believe the government knows, that business rates have been in need of reform for some time,” Usdaw general secretary Paddy Lillis told Labour Research. 


He said there has been “tinkering around the edges”, but that the government “needs to look at this fundamentally to reflect the modern retail sector”.


The strategy makes clear the current economic framework — from taxation to commercial rents to business rates — is no longer fit for purpose and highlights “gross disparities” between in-store and online retailers. 


For example, the Tesco supermarket chain paid business rates totalling almost £700 million in 2016-17. In contrast, while online retail giant Amazon reported UK sales of £8.77 billion, it paid business rates of just £63.4 million despite generating higher profits. 


This difference of more than £600 million gives Amazon a huge financial and competitive advantage over other retailers in the sector, says Usdaw (see box this page below). 


Improving pay and security

Better pay and secure work to drive productivity and good customer services is another central demand outlined in the strategy and a goal that other retail unions share. 


Usdaw says retail staff are working under “a cloud of uncertainty/insecurity” and “morale in the sector is at an all-time low”. It describes a constant cycle of restructures, store closures and contract variation which have left staff overworked and underpaid. 


Despite an increase in the National Living Wage for those aged over 25 — and around a third of retail workers are under 25 — it says pay and benefits consolidation, rising inflation and reduced in-work benefits mean there has been no real-terms increase in take-home pay for many staff for several years. Unions are demanding a minimum wage of £10 an hour.


Hours and “one-way flexibility” are also real problems for retail workers, according to general union GMB national officer Gary Carter. He represents workers at supermarket chain Asda and household goods retail chain Wilko’s. He says the top priorities for workers at these chains include cuts to hours resulting in insecurity, and staff “increasingly being expected to work anywhere, anytime and changes to shifts and hours of work”. 


“Lots of people work in the sector because they need flexibility — students, people with childcare and other family responsibilities — but the flexibility is all one way,” he told Labour Research. 


In May, a GMB survey found the vast majority of Asda staff (92%) opposed plans to impose a new contract which would see them no longer paid for any breaks and forced to work bank holidays in return for £9.00 per hour pay rates. 


That same month, the union warned of a major strike looming at Wilko’s over the company’s decision to force staff to work weekends. In a consultative ballot, more than 90% of GMB members at two distribution centres said they would take industrial action over the rota changes. 


Changes to contracts are also the main issue for workers at supermarket chain Sainsbury’s, according to Bev Clarkson, national officer at the Unite general union. The company argues the changes are necessary if it is to remain competitive. 


“Although the changes mean a pay rise to £9.20 an hour, this isn’t as lucrative as it sounds because of the terms and conditions they have had to give up — including paid breaks,” she told Labour Research. 


The loss of breaks also means a reduction in hours, which particularly affects members claiming in-work benefits. Unite has managed to negotiate a delay to the changes until 2020. 


“Low pay and insecure work are not conducive to productivity and morale,” Lillis told Labour Research. “Should we be asking for better pay given the current challenges in the sector? Absolutely. A key selling point for bricks and mortar retailing is strong customer service from experienced and committed staff, and that requires decent pay and secure work. 


“It’s about having a long-term vision for the sector that includes better staff retention and better customer services.”


Automation

BRC chief executive Helen Dickinson told those gathered at the strategy launch event that the sector is going through a transformation driven by technology that is changing how people want to shop, and facing rising costs. 


The industry will look very different in the future, the BRC believes, with fewer shops. But those that remain will focus on providing an improved customer experience, as well as local community connection.


But Usdaw says too many retailers are looking towards short-term solutions to keep their heads above water rather than long-term solutions, which include better pay. Automation is a case in point. 


“Automation provides lots of opportunities for retailers to improve customer services if it is introduced alongside staff,” said Lillis. 


“Instead, some retailers are using it to cut costs and cut staff. We’ve seen some evidence of a backlash, with examples of people leaving a store because there are no staff on hand to help.”


Government action required

The third strand of the union’s strategy calls for a change in perceptions and greater government focus on the sector, which is a fundamental part of the UK economy. It directly employs three million people and a further 1.5 million jobs are reliant on its success.


Labour shadow chancellor John McDonnell told those gathered at the launch event about the Labour Party’s five-point plan to rebuild the high street (see box). But Lillis commented: “The key missing stakeholder was the government.” 


While the retail crisis has made headline news, this is not reflected in the focus on government policy. 


Usdaw says it is difficult to understand why retail is treated differently from so-called traditional industries such as manufacturing when it contributes 11% to UK economic input. 


Its strategy aims to change mind-sets and challenge “the overt perception that women simply work in retail for ‘pin money’ or that retail is just a ‘stop gap’.” 


“We need to challenge the negative perceptions that retail is not a proper occupation,” said Lillis. 


“Without retail jobs, many households would struggle to make ends meet. We need to change this thinking and transform perceptions to make it clear that retail jobs are real jobs”.


Union density


As in many other parts of the private sector, union density in the sector is low — around 10% — with widespread hostility to union organisation. Lillis described Arcadia workers as being “sat on the sidelines while their employer and the landlords are negotiating over the future of their jobs” at the anti-union company which does not recognise Usdaw. 


And while Sainsbury’s has signed up to the Ethical Trading Initiative, Usdaw and Unite only have representation rights, rather than full collective bargaining arrangements. 


Usdaw will now build on its strategy with political lobbying, working with employers it has recognition agreements with, and Save Our Shops events in local high streets to follow those organised in March and June.


“Our high streets are in crisis and we need the government to adopt a clear and coherent strategy for retail,” said Lillis. The hope is the strategy will be “a catalyst for a combined and concerted effort to tackle the growing retail crisis and save our shops”.