Arcadia, the owner of popular retail chains Topshop and Dorothy Perkins, has taken drastic measures to ensure its survival amidst the ongoing coronavirus crisis. With the retail sector facing significant challenges, the company has made the decision to furlough the majority of its staff.

Currently, 14,500 out of 16,000 employees at Arcadia have been furloughed. Store staff have been on furlough since March 21, while most head office staff will join them from April 5. This includes employees from other well-known brands under Arcadia’s portfolio, such as Topman, Miss Selfridge, Wallis, Evans, and Burton.

Despite the closure of its physical stores, Arcadia is still able to operate its webstores. However, the company has implemented increased safety measures to protect the staff working in these operations. While most head office staff are being furloughed, a few key employees are being retained to perform essential functions.

Alongside furloughing staff, Arcadia’s top team, including CEO Ian Grabiner, will be taking a pay cut. Grabiner has chosen to forgo his salary and benefits for the time being. These measures have been deemed necessary in order to navigate the challenging times caused by the ongoing crisis.

Arcadia plans to take advantage of the UK government’s job retention scheme, which provides financial support by paying 80% of monthly salaries up to a maximum of £2,500. This move may set a precedent for other fashion retailers to also furlough their employees during this period of uncertainty.

Sofie Willmott, lead analyst at GlobalData, predicts that other clothing and footwear retailers are likely to follow suit and furlough their employees. With consumer spending on clothing and footwear decreasing significantly, retailers are cutting costs in order to safeguard their long-term future. While online sales continue to operate, there is little work for store staff and head office employees may be focused on managing order cancellations and driving online sales.

Furthermore, the strain on discretionary spending has made range-planning challenging for retailers. They are hesitant to commit to future inventory when sales are uncertain. This is expected to impact future product drops, and retailers will need to carefully manage their intake and newness to ensure they have a comprehensive range available when consumers are ready to make purchases again.

The retail industry is facing unprecedented challenges as the coronavirus pandemic continues to unfold. Furloughing staff and implementing cost-cutting measures are strategies that companies like Arcadia are utilizing to weather the storm and secure their future in the post-pandemic era.

Useful Links:
Government’s Job Retention Scheme
GlobalData’s Retail Analysis