Hobble Christmas and we starve

Mid-October and the Christmas displays are already going up, in the hope that there will be Christmas. Shops are relying on it: the Christmas trade can be the difference between survival and bankruptcy.

Retail has taken a hammering this year because of the lockdown and several large High Street names have folded – we are not seeing the full effect until the economy wakes up and we see who is not there. Some are nominally hanging on to see if their normality returns, but they are insolvent, and will go to the wall unless the turn-round is dramatic. Christmas sales are a key to this. It is not looking good.

Retail is not linear, but many of its expenses are. A shop will be paying the same rent, the same rates and the same wages and National Insurance throughout the year; insurance, hire charges and licences will be annual sums reckoned evenly across the year; however income is not the same. In most businesses there is a Christmas rush, and that earns is the money which pays for those expenses.

It is not considered odd that hotels and B&Bs will pay the same rent and rates in the winter as in the summer but do all their trade in the summer: they make a loss in the winter by paying out with no income because they will make it all up in the deluge of custom in the summer. This may seem less apparent in the retail trade, but that is how the economics works here too: the shop can tick by over the whole year, feeling the market, building goodwill, training the staff, but waiting for the Christmas rush.

Many a business makes no net profit all through the year month by month until the nights grow short: the profit is to be made in the run-up to Christmas, which pays for all the year’s expenses. I have seen shopkeepers, ready to take a new shop on, begging to get it done in October because if they do not get the Christmas trade, they will pull out rather than sit on a loss-maker.

It is not just obvious businesses which have a Christmas rush either – it reaches all sorts of enterprises; even builders’ merchants and pharmacies see it. Consequently all the suppliers feel the rush, and all the professions which serve those businesses. They all rely on it.

Now though, the streets are quiet and the shops have fewer customers. They are in fear as Christmas approaches and customers are still being driven away, and there is no assurance that they will have their one profitable time of the year. To cancel the Commercial Christmas or even to hobble it will delete the year’s profit from the ledger, for the majority of businesses and their employees.

Essentially, it is necessary either to end the lockdown or face mass shutdown. It will not be pretty.

Author: AlexanderTheHog

A humble scribbler who out of my lean and low ability will lend something to Master Hobbes

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