Will we lose shops and how badly?

[ianmacc]

The longer this goes on the more I fear that some model shops won’t emerge from the other side.  We will certainly lose a lot of small businesses in general. 
 

How severe/ likely do folk think this is?

 

Note - please don’t turn this thread into speculating about individual premises as that would be damaging. 
 

Just curious as to people’s thoughts...

[Gwiwer]

The short answer is that we don't know.

 

I read predictions ranging from a return to something close to where we were before to the death of the High Street.  In reality the retailer-rich High Street has been fading steadily for many years as shopping patterns change hand-in-hand with evolving technology.  

 

Many smaller businesses may in fact survive based upon their staff being paid out at 80% by the Government schemes and other payment "holidays" such as business rates being placed on hold. Some will benefit from insurance settlements.  What we are very likely to lose in my opinion are those businesses which were already trading on a wing an a prayer from a weak position.  What we may well retain and even see an increase in are the artisans such as master bakers and fishmongers.  Of note our local fishmonger - a traditional style shop - continues to be very busy and now has a daily queue of some 10 - 20 people awaiting service.  

 

What is apparent - and was apparent before this problem arose - is that department stores are in deep trouble.  We have lost some chains, others are in administration and one of our High Street bastions, M&S, is probably teetering on the edge and has wobbled close to failure several times over the past 20 years or so.  

 

Large stores operating on low profit margins but paying massive rates bills (albeit with diminishing staff costs as self-checkout arrives) are probably going to be the most noticeable victims.  

[Widnes Model Centre]

 

Due to a unrelated family illness we closed a week before Lockdown in order to arrange care for our relative.

 

We opened on the Saturday before Lockdown. We haven’t opened since. We took this decision as a family owned and run business for what we thought and still think were  the right reasons. 

 

Our location and travel time time for our son made the non essential travel even more reason to explore if/how we could safely run a mail order operation. The local and extremely busy Post Office reduced their opening hours to 12 hours a week. When it is open there  are long queues. Not very safe no matter what the staff try to do.

 

We are determined to start business as soon as it is safe to do so. As a Partnership we are all self employed so none of us can be Fairloughed.

 

No income for four weeks is obviously hitting us hard. We have yet to receive any government assistance and cash flow is nil. We are paying our suppliers for goods already delivered, some delivered after we had asked for goods to be placed on Hold. 

 

We we have been asked by one supplier if we anticipate any problems with future payment. If so can we put the reasons in writing and hopefully the reasons will not effect our credit rating. Note, not a company that appears on this forum.

 

There are plenty of shops in our situation and we are sure that they will be equally hoping that their businesses survive. 

 

We we just hope in our business that customers understand, and that they will come back to us again. 

Edited April 13, 2020 by Widnes Model Centre

[ianmacc]

Ironically I’d miss ten ‘John Doe’s mega everything store’ far less than ‘Joe Soap’s little kits and bits store’ and I bet I’m far from alone here! 

[guarded]

I'll certainly throw some business your way when things are settled.

[JohnR]

As noted, many smaller shops are run by people who are classed as self-employed. As such, they cant be furloughed, and are really still waiting for money  to come through from the Government.

 

Dealing with suppliers will be a nightmare. Imagine someone receiving a large delivery just before lockdown on 28 day terms. That invoice is due now. But they havnt managed to sell any of it....

 

Given the circumstances, the likelihood that the lockdown will continue for at least another month in its current format, there will inevitably be some businesses which will fold. The larger ones, who can furlough most of their staff, and operate on a skeleton staff doing mail-order to keep ticking over will survive. 

[Deltic]

Many small shops can benefit from applying for the Small Business Grant scheme, whilst from the Government it is being handled via each local Council.  It is worth exploring that potential income avenue.  As a Grant it does not have to be repaid unlike the Government Loan Scheme, but it has to be declared as Income on the Balance Sheets.

 

Our Hobby may well be different once shops can reopen, but I am certain that there will be a requirement for some form of social distancing in place for several months.

[G-DIMB]

One thing to point out though about the grants is that they are classed as income according to my accountant and HMRC so therefore you need to pay tax on them by Jan 2022. Of course this isnt widely known yet and the information is still a little sketchy so if anyone can prove different please say.

 

[Pandora]

These lockdowns are   an ON/OFF , ON/OFF  cyclic schedule until a a either vaccines or mass immunity to Covid-19 is in place,  ie possibly  until late 2021.

The public are becoming accustomed  to spending less and in other ways, I know of two small shops who are terminating their lease early,  owners tell me that after the  Brexit tote in 2016,  spending dried up, from  busy with profit to breaking even/getting by. The week before the public lockdown, one of the shops suspended opening up  due to lack of footfall and passing trade, the owner said losses are minimised by being closed  with an empty till than open with higher overheads and the till near-empty.

Speaking to neighbours, comments and opinions expressed of  having found  ways to amuse and interest self and family  withou loading  the credit card,    perhaps the mentality of consumerism is going to take a big knock , and people  will learn to enjoy and be contented with what they already have,.

 

All of the above is anathema to Banks and Big Business in our Financialist economy

 

Edited April 20, 2020 by Pandora

[Joseph_Pestell]

36 minutes ago, G-DIMB said:

One thing to point out though about the grants is that they are classed as income according to my accountant and HMRC so therefore you need to pay tax on them by Jan 2022. Of course this isnt widely known yet and the information is still a little sketchy so if anyone can prove different please say.

 

 

They may need to be included in your income calculation. But, if they are doing what they are supposed to, replacing income lost, they won't lead to a tax liability.

[Joseph_Pestell]

5 hours ago, Deltic said:

Many small shops can benefit from applying for the Small Business Grant scheme, whilst from the Government it is being handled via each local Council. 

 

Not a shop, but it is looking like we are not going to get this grant. And, as a new business, we don't qualify for furlough payments either.

 

So, next week, an outline planning application will be put in to convert the pub into three houses. Council can not have it both ways. If they want a pub in the village, they need to support it through this crisis. If not, they should give planning consent.

[Joseph_Pestell]

On 13/04/2020 at 12:14, Gwiwer said:

 and one of our High Street bastions, M&S, is probably teetering on the edge and has wobbled close to failure several times over the past 20 years or so.  

 

 

 

A victim of misreporting by incompetent journos. M&S has had difficult years in that it has made less profit than previously. But it has always made operating profits.

[G-DIMB]

16 minutes ago, Joseph_Pestell said:

 

They may need to be included in your income calculation. But, if they are doing what they are supposed to, replacing income lost, they won't lead to a tax liability.

Indeed thats probably the expectation but some may find they have a bigger bill then than expected. I suspect however many claimants aren't aware of that and may be working on the belief its tax free. I think the only thing we can be certain on is we cant be certain on anything!

[Nearholmer]

My gut feel is that the broad-brush picture is clear:

 

- many high street shops have either closed already or have been on the brink for ages;

 

- we are going through something which further tilts trade away from high streets towards “internet and delivery”;

 

- when it is eventually over, we will need to pay more tax to pay-off the debts taken on to tide things through, so will have less money to spend on shopping high street or internet;

 

- overall, the result will be that ess trade will take place through physical shops.

 

But, broad-brush and detail are often very different, and once landlords realise the truth and start either selling-out or cutting rents (which will hurt pension funds, BTW) it might be that new/different/some specialist traders will prosper.

 

Even in non-prosperous towns and cities, in areas where premises are cheap-enough people, eke a living from trading. Not mega-shops doing mega-turnover, but small shops.

 

Overall turnover/volume in the sector significantly down, and different in detail at the ‘front end’, would be my guess.

[Grovenor]

Seems to me that if the owners manage to make a profit for the year by next April, with or without a 10K grant, they should be pleased to be able to pay some tax.

[Nearholmer]

I was talking about the tax that all us consumers/customers will need to pay, which will reduce our discretionary spending power.

[Grovenor]

It was G-DIMB talking about the 10K being taxable, not you!

[andyman7]

High street retail has been in trouble for years, with high fixed costs and loss of footfall to online. I suspect that the longer term effects of the current crisis will in many cases be where an already present trend is accelerated - e.g. pubs losing business, people working from home etc.

 

However, quite frankly, for many areas the high street model shop as a local facility has already long ceased to be. Where I live in South London there is not a single model shop or department store with a model section left, nor has there been for some years.  The nearest shops are Jane's Trains in Tooting, Kent Garden Railways in Orpington or Ian Allan at Waterloo - every single one is the best part of an hour away.  Therefore, whilst I would in no way underestimate the difficulties of the situation, I consider any functional retail model shop these days to be an exception (and yes, I do my best to support them!)

[Mike at C&M]

We have sat and done the sums about how long the cash we have will last, but what we don't know is how long the lockdown will last, and when, and if, our shop trading will return to what we would consider normal.

 

Another consideration is what our suppliers will do once lockdown is over. Will we be deluged with the goods that we would have expected over the past few weeks, and will the cash then be available for to pay for these from a resumption in our trading,

 

Many of us have received the rates grant, but we have had to use part of this to pay suppliers for goods that came in pre-lockdown, and where the monies that would have come in through normal trading, but didn't because of the lockdown. And then there are fixed costs such as rent, fees for online trading etc,, plus the need to support ourselves, as we are self-employed.

 

There is deferment of VAT and income tax which will help cash flow, but it all needs to be paid eventually.

 

The financial tightrope keeps moving around beneath our feet, and we do not know which direction it will go in next. Just so long as we can still be standing on it when things get back to normal.

 

Interesting times.

 

[Widnes Model Centre]

 

We are only in a small town but we have Liverpool and Manchester fairly equidistant. We also have another model railway business nearby. We manage in normal circumstances to have a lot of footfall being in the town centre and where it is actually impossible to pay for parking. Customers can park on the single yellow line and the Police understand that they are supporting local businesses and turn a blind eye. There are NO traffic wardens. 

 

We will be absolutely delighted to make a profit and pay tax in this financial year. We have a very loyal customer base. As alluded to above. We just hope that when we open they will return. 

[G-DIMB]

Indeed i was just making people aware that there are conditions attached to that £10,000. For me my local model shop is Model Railways Direct and from what i understand they have been fairly busy with online business but i can certainly see some of the concerns some shops have as it would seem deliveries have arrived in some cases from different suppliers and it sounds like more is on the way. Of course if the public and trade cant pay it feeds back up the chain to the manufacturers.

 

There simply isn't an easy answer and as we don't have a target for which is day 0 (IE the light at the end of the tunnel) then its impossible to work out, but if you do know then please let me have this weeks lottery numbers.

[Revolution Ben]

 

Hello all,

 

I have huge sympathy for the retailers in this difficult time, though I have a sense that those businesses with an effective online presence should be able to manage while postal deliveries are continuing, especially as the Chief Health Officer has made it clear that the mental health of the nation during lockdown is an important consideration and for this reason toy/hobby and craft activities are to be encouraged.

 

Going forward, I have noticed that my Facebook feed is full of (mostly male) former colleagues building models and it may be that this enthusiasm stays with them after the lockdown is over.

 

Cheers

 

Ben A.

[DCB]

As with every change in circumstances there will be winners and losers. It looks like the "High Street" retailers relying on over the counter face to face sales will be the losers, while those on the periphery with substantial on line sales could do OK, furlough 50% of the staff and still do 75% of the sales.  The trouble is the "High Street" is in free fall with greedy landlords failing to reduce rents on review in line with falling sales, If you are a retailer with a business making losses yet unable to get out of a lease then a soft landing liquidation strategy may be impossible. The organisation I am with is in just such a lease situation with premises which are no longer suitable but which we are locked in to for a further 3 years.  I suspect the shops run by enthusiasts for enthusiasts will survive and the ones run by accountants to maximise profit will fail as all their assumptions crumble to dust.  I just hope the Model shop in Grosmont is open for the NYMR autumn Gala as to be honest that would have been my next scheduled visit to a model shop. For the rest I use mail order.

[roundhouse]

My 'local' model shop is Gaugemaster 50 or so miles away but is the one that I tend to frequent most as its near my other halfs mother.

 

More local is Kernow Guildford but that is around 35 - 40 minutes away plus add another 5 - 10  for walking form the car park so only tend to go there if someone else is also going as you cant ring direct to check they have what you want, so mail order is my normal way now.

[MartynJPearson]

I could be completely wrong, but it was my understanding that some of the larger manufacturers insisted on companies having a physical presence (rather than just being online) to be regarded as an official retailer. I wonder if that might change in future?

 

One of the bigger worries of course is when we all realise that those "greedy landlords" running commercial properties were actually where our pension funds were invested.