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Covid-19 - Impact on Retail

Guest Blog - Joanna Newell from Keynsham Consulting.

· Blog

According to a report produced by the British Retail Consortium*, 73% of non-food retailers reported that the Covid-19 pandemic had disrupted their ability to trade “a great deal”.

While most food stores remained open, 80% of non-food stores had to close and 31% of online non-food retailers were not able to operate at capacity.

Half of the non-food workforce was furloughed in comparison to no furloughs in the food sector.

80% of food retailers and 36% of non-food retailers hold 6 months’ of cash reserves. For the industry as a whole, 57% of retailers hold 4 months’ or less of cash reserves.

It appears that the Government’s relief schemes proved more helpful for food retailers compared to nonfood retailers and were more helpful for larger retailers than smaller ones. (Smaller retailers are defined in the survey as having less than 10,000 employees).

Of the ‘smaller retailers’ surveyed, only 13% responded that the relief schemes helped them “a great deal” to mitigate the impact of the pandemic.

The BRC also tracks monthly sales trends and the impact of the pandemic can be clearly seen in the results from March to June 2020;

March 2020

Total retail sales were down 4.3% and like-for-like sales were down 3.5% compared to March 2019. Sales experienced a historic drop with the COVID-19 prevention measures changing the consumer landscape significantly.

Total sales were down 4.3% but there was a sharp divide between food/non-food and physical/online sales. While food and essentials had a surge at the start of March, it dropped into negative growth after lockdown and the introduction of social distancing in stores.

Staying at home resulted in a surge in sales of food & drink, computer equipment, board games, fitness equipment and toys. And of course, health related goods were up too

April 2020

Total retail sales were down 19.1% and like-for-like sales were up 5.7% compared to April 2019. This decline is the worst ever recorded since the BRC's sales monitor began in January 1995. The total sales fall of 19.1% is staggering and with so few physical stores open for business it made like-for-like comparisons difficult to establish.

Even food sales were disappointing with the virus preventing large family gatherings over Easter. The decline was particularly steep for many non-food categories such as clothing, footwear and large household items.

The proportion of online sales rose sharply with products such as games consoles, bicycles, office equipment and haberdashery having strong growth.

May 2020

Sales in May demonstrated yet another month of struggle for retailers. Food sales rose, and clothing and beauty improved slightly. Continuing the lock-down trend, office supplies, fitness equipment and bikes all performed well thanks to strong online sales. DIY and garden supplies also had a boost in May.

While the month showed record growth for online sales, many retailers will probably be anxious to see whether demand returns to the high streets when shops start reopening from 15th June.

We’re seeing historically high levels of online sales, currently over 60%, and while this will ease as more stores open, these new consumer habits will probably see the online channel be more prominent going forward.

June 2020

June finally saw a return to growth for total retail sales. This is the first growth recorded since the
lockdown. Like-for-like sales comparisons have been measured excluding temporarily closed stores but including online sales.

This LFL increase is primarily driven by online sales.Despite footfall still being well down on pre-coronavirus levels, average spend was up as consumers made the most of their shopping trips. Computing, furniture and home improvement all performed well as
consumers continued to invest in home comforts and remote working. However clothing, footwear and health & beauty are still struggling.

All eyes are on next month now that pubs, restaurants and cafés have reopened, in the hope that it brings a much needed boost to the high streets and shopping centers.

*The BRC asked 86 CEOs across the retail industry, who represented a combined total of £61bn of retail sales. Their responses were captured in the week commencing 13th April 2020.

To find out more about Joanna and Keynsham Consulting, visit her website here.

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