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Summary
- High-Street retail witnessed 75 per cent plunge in consumer footfall since Lockdown 2.0
- People rushed to stores for their festivities shopping before the second lockdown that increased the footfall in last some days
- October witnessed a rise in digital shopping of household items and food staples.
The second national lockdown seems to have weighed down heavily on the non-essential retailers. With over a million active coronavirus cases in UK, a second lockdown was inevitable. Lockdown 2.0 has led to a substantial decline of 75 per cent in the number of store visitors compared to the previous year period.
According to UK’s apex trade association, British Retail Consortium (BRC), the number of customers visiting the stores has gone down by nearly 33 per cent in October compared to the same period last year. Also, the high streets and shopping centres seemed deserted since the second national lockdown came into force.
All the non-essential retail stores were forced to close until 2 December in the wake of second national lockdown. Meanwhile, these stores would be incurring their fixed cost components such as rents etc. Similar kind of abrupt halt in trading activities was evident during the first national lockdown in March. Industry experts opine that the government must provide a dedicated support package for the ailing sector.
Also read: British retail sales drop at the sharpest pace since June
June, July, and August marked a recovery in the battered sector as the businesses sensed a ray of hope to avoid the existential crisis due to the first wave of coronavirus pandemic. However, the second lockdown led to a dramatic drop in consumer footfall.
According to the BRC report, the second national lockdown in November could impact the retail sector by as much as £2 billion a week, as festive season is round the corner. Notably, last month, the annual sales grew by 5 per cent year-on-year that can be attributed to stockpiling and bulk orders in anticipation of a second lockdown. However, the retail sales in September outperformed the pre-Covid levels. According to data from the ONS, September witnessed considerable spike in Home improvement sales in the non-food category.
The people are now used to these conditions due to prolonged lockdown which has had a significant change in their shopping habits. October witnessed a rise in digital shopping of household items and food staples. However, in-store sales of non-food items declined in double-digit in October compared with previous year period.
This has been a tough year so far for the UK retailers due to the crisis induced by the coronavirus pandemic. Shop closures, travel bans, and people being forced to remain indoors, taking the glory away from the high-street retail spaces. Moreover, the economic fallout that led to major job redundancies have certainly led to dip in the consumer confidence, which could indirectly impact the non-essential retail sector in the near term.
Also read: A Sigh of Relief for Tesco and Associated British Foods as the Consumer Spending Increases
Alternatively, the retail parks which mostly comprise of supermarkets and other forms of essential retail have been faring well despite the lockdown in place.
One of the obvious reasons for their success is that people can drive to these parks and simply pick up their orders facilitated through ‘click and collect’ service. People prefer this option as it minimises the risk of falling prey to the deadly virus as it takes care of social distancing protocols. Moreover, these retail parks are often spread out at open air places which further mitigate the risk of spreading the deadly virus. Notably, the reproductive rate of virus (denoted by R) has gone past one, which is indeed not a healthy sign.
Another reason that has contributed to the success of these retail parks is that they deal in essential retail such as processed food items, groceries, and consumer staples. During the peak of the unprecedented crisis, most of the essential retail stores witnessed stock-outs in these product categories as people resorted to stockpiling and bulk orders. In addition, most of these retail stores had to introduce a cap on particular items such as tinned food and sanitisers.
Although these retail parks did comparatively well in comparison to high-street retail, they still recorded a significant amount of drop in consumer footfall. Just before the second lockdown started, Britons rushed to stores for their Christmas shopping and other essential items that led to slight uptick in consumer footfall, according to leading global provider of retail analytics, ShopperTrak.
Also read: The Plight of High Street Retailers Amid the Covid-19 Crisis
The cold weather coupled with a lockdown could push Britons to become heavily reliant on online shopping in the near term. Moreover, people are expected to spend major part of their earnings on essential items. The consumer confidence has taken a back seat due to enormous amount of uncertainties with respect to vaccine development and Brexit. Most of Britons might rely on online platforms for Christmas shopping. Therefore, the plight of the high-street retailers amid the second lockdown is expected to continue.
