2020, the year the retail industry spent in lockdown
Dec 24, 2020
As a most challenging year comes to a close, retailers are looking back at a tumultuous time that started early in 2020. Storms Ciara, Dennis and Jorge combined to make February the wettest on record, while at the same time the onset of the coronavirus that originated in China in December, spread quickly to the West, developing into a beastly pandemic that would soon halt physical retail and eradicate footfall for the unforeseeable future.
Non-essential stores in the UK, Europe and rest of the world began shutting their doors on government orders. The first response was panic-buying, which saw supermarkets plagued with long queues and empty shelves before online sales of categories like comfortwear began to boom. E-commerce emerged as the only sales channel as much of the world was forced to work - and shop - from home.
Retailers without e-commerce websites lost millions
For retailers who did not have transactional websites the impact was devastating, writes Tim Denison in Ipsos Mori’s November Retail Insights Pack. Sales at Primark plummeted from 650 million pounds per month to absolute zero. For those that did operate online, the pace and investment to scale-up and improve processes rocketed.
For three months all non-essential stores remained shut. When they were at last permitted to re-open, from 15 June, shoppers were reluctant to return immediately, despite the immense effort and well thought through steps retailers had taken to protect shoppers and staff alike. Tracking by Ipsos Mori showed footfall fell to a third of the year before.
By July, 42 percent of non-food sales were still being made online, when a year before the proportion had been 30 percent Over the summer, footfall slowly returned to the high street and by the first week in September it had recovered to two thirds of 2019 levels, said the report.
Shopping centres suffered the highest number of casualties because they had a higher proportion of fashion stores – the sub-sector most heavily hit by the pandemic, says Denison. In footfall terms city centres been most impacted. London has been the hardest hit by the collapse in visitor numbers, figures from the WTTC show, because about 85 percent of tourist spending in the capital was from foreign visitors, who were no longer able to travel due to restrictions.
The second wave of retail closures from 5 November severely halted any recovery over the festive season. Ipsos Retail Performance had originally forecast that footfall during the week in which Black Friday falls (the week commencing 22 November), would be the busiest of the year, but that was not to be.
Any hope for a retail recovery in December were also quashed when the government increased restrictions to Tier 4, again closing all non-essential retailers. Experts have warned the loss of sales in London, the southeast and east England may cost retailers 4 billion pounds in lost trade.
Retail leaders this week called the new lockdown a “hammer blow” to stores, which are facing the loss of more than 2 billion pounds a week in sales over the fholiday fortnight reported the Retail Gazette. The Centre for Economics and Business Research said that up to 7 billion pounds of spending would be delayed or lost.
“We know the government has got difficult decisions to make and the Covid situation is very fast-moving but this is hugely regrettable news,” BRC chief executive Helen Dickinson said.“Retailers invested hundreds of millions making shops Covid-secure and Sage experts’ advice has been that closing non-essential retail has a minimal impact on the virus spread.
“The stop-start Government approach is deeply unhelpful for businesses and the consequences of this will be severe. The decision, only two weeks after the end of the last national lockdown, is right in the middle of peak trading – which so many depend on to power a recovery.”
2021 could be a year of retail innovation
The outlook for 2021 is not all bad, according to Forbes. Apparel and footwear will come back strong, even sooner than we think, it said. But, what people want to wear and how they prefer to buy it will be different. Consumers are not anxious to give up the convenience and safety of online shopping.
There is room for innovation, too. Gaps left by failed retailers and brands will make way for new innovative startups led by Millennials and Gen Zers, many whom have been out of work since the start of pandemic. Let’s all pray for that.
Photo credit: FashionUnited