Non-essential retailers were able to re-open their doors on June 15, marking a return to the "new normal" after an extraordinary 85 days under enforced closure. This is a step in the right direction, but retail's fight for survival is far from over...
For a sector already grappling with oversupply, rising overheads and structural changes in shopping habits, the pandemic has been a perfect storm of proportions few could have predicted.
While the government has provided support via loans, the furlough scheme, and business rates holidays, these measures will not be enough for those retailers that were in precarious positions even pre-crisis.
The growing list of administrations in recent months points to this, with fashion, casual dining and operators under private-equity ownership particularly vulnerable.
The Centre for Retail Research forecasts 20,620 store closures in 2020, up from 16,073 in 2019, with retail sales (all channels) not returning to 2019 levels until 2022 - reflecting ongoing social distancing and fragile consumer confidence.
That said, we should not give too much weight to the numbers or put timescales on a recovery at this stage. Beyond the practicalities of re-opening in a safe manner, and the relief that a return to trading brings, the priority for retailers is to build towards a sustainable long term future.
The virus will expedite changes to the retail ecosystem that would likely have occurred over the next decade anyway. This means fewer but fitter operators, greater collaboration between landlords and tenants, and a more community-based, purpose-driven retail offering.
by Josh Holmes
Tech will play a crucial role in this. Self-checkout, contactless payments and digital loyalty schemes seemed like nice-to-haves before COVID, but are now must-haves for retailers.
Retailers have been installing ‘sneeze screens’ to protect staff and customers from the virus, but a better solution is to offer no checkout at all. Cashier-free retail takes different forms, from the mobile scan-and-go systems available in supermarkets to AI-driven technology such as Amazon Go which detects when products are removed from shelves, allowing shoppers to simply walk out of the store without queuing.
The experience trend that was driving retail pre-Covid will not disappear, as consumers are inherently social beings. However it may look slightly different in an environment where crowds, and touching or experimenting with products can not be actively encouraged.
Retailers will have to work harder than ever when it comes to curating their offering, both online and offline. Fitting rooms with smart mirrors to virtually try-before-you-buy, immersive showrooms that use augmented reality to launch a new collection and online personal shoppers are just a few examples of ways retailers can innovate to meet the needs of consumers in a post-Covid world.
by Sukhdeep Dhillon
Long lines were seen at major stores across the country upon reopening, with keen shoppers waiting outside. But how much is this down to the nature of social distancing rules that restricts the number of people in a store at one time or are we in for a retail revival?
Footfall in UK high streets was up 47.5% and in shopping centres up 45% compared to the week before. This was more than double what was reported for retail parks, but this was to be expected as retail parks are typically home to food and home stores which have continued to trade. In the week ending July 12, footfall across all UK retail destinations was still down by 42.6% year-on-year.
A common observation is that while shopper numbers are down, average transaction volumes are up. This mirrors what food stores witnessed during lockdown, and reflects shoppers consolidating multiple trips into one. The expectation is that the recent VAT reduction and government's 'Eat Out To Help Out' discount scheme will support a recovery in footfall.
One thing that is clear is that lockdown transformed people’s buying habits almost overnight, from bulk buying to more online shopping. The reliance of online for some has proven to be vital to purchase even the most basic of necessities. Time will tell how much of this change in behaviour is temporary and how much is here to stay. We have seen a drastic reduction in panic buying, but it is looks like greater reliance on online will be a permanent change for many.
Not all retail will suddenly move online. We will still have a place for physical stores, particularly brands that continuously innovate to retain consumers. This pandemic will sadly push the retail brands that have been coasting for too long over the edge.
Retail stores have been moving away from being places of transaction to places of interaction, with more retailers using the offline space to connect the products with their customers. This trend will be expedited, with retailers reviewing their offline versus online space.
The pandemic has also fuelled conscious consumerism, with consumers increasingly looking to shop in a responsible way. The rationing and restriction suddenly imposed on us during lockdown has led to many consumers re-evaluating their purchasing habits, including cutting waste and supporting local independents. The rise of conscious consumerism will force retailers to reassess their business models and opt for an environmental-friendly, sustainable approach. A change for the good.