Two major UK retailers collapsed within 24 hours of each other earlier this week, putting a total of 25,000 jobs across 600 stores at risk.
On November 30, the Arcadia Group, which employs 13,000 workers, began insolvency proceedings, and while no layoffs have yet been announced and stores are currently still operating, the company is heavily indebted and most of its stores are expected to close eventually. On top of that, Arcadia's pension fund is reportedly running a £350 million deficit and employees' pension benefits are likely to be reduced.
On December 1, the Debenhams department store chain, which was closely linked to Arcadia, went into liquidation and will be wound down by the end of the year, with up to 12,000 jobs lost. Staff pensions are also affected, with the Pension Protection Fund estimating that employees might receive up to 10 percent less than expected.
The collapse of the two retail chains, described as the UK's worst corporate failures of the COVID-19 crisis, has been primarily attributed to corporate raiding by investors coupled with bad management. Stiff competition from online retail, high costs, and failure to adapt to a changing business environment made the situation worse, and the pandemic was simply the last straw for the two companies.
They are only the most prominent casualties, though. The UK retail industry has suffered through the pandemic, with smaller retailers and particularly fashion brands going out of business one by one, and the Center for Retail Research estimates the total tally of retail job losses this year to hit 235,000. Despite the government's attempts at job creation throughout the year, it is unclear whether the various job creation and investment schemes can offset the losses from just this one industry.