Next bows to pressure, closes online operations

Next, TK Maxx and River Island have all closed their e-commerce operations due to concerns around the health of warehouse staff amid the Coronavirus crisis.

Pressure from politicians and trade unions forced the fashion retailers to u-turn on previous commitments to keep online sales going after the closure of stores earlier this week.

Next stated that it temporarily shut down its online operations last night and stopped taking orders, following an offer on Wednesday of 20 per cent pay rises to any worker willing to continue picking fashion items for online orders. Allegations also emerged that warehouse workers were not adhering to social distancing.

“It is clear that many increasingly feel they should be at home in the current climate,” read a statement. “Next has therefore taken the difficult decision to temporarily close its online, warehousing and distribution operations.”

Last week, Next's annual results revealed it was preparing for a “significant” downturn in trading due to the COVID-19 outbreak. They included stress testing results in response to the pandemic, suggesting that it could “comfortably sustain” more than £1 billion (25 per cent) loss of annual sales over the full year.

The Next Online Platform saw full price sales up 11.9 per cent for the year, with profits up 13 per cent on last year.

Some fashion retailers continue to run online operations, including Boohoo and ASOS, despite the government calling on all non-essential workers to stay at home.

A message on TK Maxx’s website read: “As the situation has unfolded, we think it is necessary to stop taking orders online. We are sorry for any inconvenience but our priority is the wellbeing of our associates and their families.”

Meanwhile, River Island said it had started preparations to shut its distribution centre in Milton Keynes indefinitely from the end of this week. It will fulfil all outstanding online orders before closing the centre, but no new orders would be processed until it reopens.

Patrick O’Brien, UK retail research director at GlobalData, commented: “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.”

In the homewares sector, 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.

“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,” O’Brien added.

Earlier this week, GlobalData forecast that the UK clothing and footwear sector will bear the brunt of the COVID-19 impact on retail, with 2020 sales down £11.1 billion on 2019.

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