The outbreak of the pandemic has caused unprecedented damage across the world. It has claimed nearly 250 thousand lives globally. Moreover, it has wreaked havoc in the global markets. Major indices of the world had seen severe wealth destruction. Panic-stricken investors exercised major sell-off around the world. As there is still no vaccine or medicine for the disease, the only method to contain the spread of the pandemic was to impose lockdowns and put travel restrictions. People were asked to avoid going to mass gatherings and practice social distancing (keeping 2-metre distance from another person) and were advised to stay at home.

The world is a global village and is primarily driven by globalisation, and in the manufacturing sectors, supply chain and procurement play an important role. Amid the lockdown enforced due to the novel coronavirus, the supply chain has been disrupted for major industries due to vehicular movement restrictions. All the retailers were asked to shut shops amid the lockdown. Only the retailers which dealt in essentials category could operate. Hence, the Food & Drug retailers continue to be in great demand amid the coronavirus crisis.

Industry experts are of the opinion that the online Food & Drug retailers are likely to record strong growth amid lockdown. As coronavirus restriction drive demand, the retailers have ramped up internet operations to serve millions of shoppers, as fears of catching Covid-19 still exists. Tesco Plc (LON: TSCO) has reportedly doubled its number of delivery slots to more than a million in the last six weeks. By the end of this week, J Sainsbury Plc (LON: SBRY) is also likely to increase its number of slots to 600 thousand. Waitrose Limited is likely to add an extra 13 thousand weekly slots by September along with a warehouse facility in London. Other retailers are likely to increase their deliveries as well.

If we talk about the stock price performance of the retailers, since the last month under Covid-19 induced lockdown, Tesco Plc (LON: TSCO) has generated a price return of nearly 5 per cent. WM Morrison Supermarkets Plc (LON: MRW) has generated a price return of nearly 2.19 per cent. Ocado Group Plc (LON: OCDO) has generated a price return of 33.82 per cent in last one month.

The retailers witnessed a huge surge in demand for the food staples, processed foods, Personal care, Household products and Home Entertainment in the lockdown induced by the pandemic. They also witnessed panic buying and stockpiling by people as the tenure of this lockdown is still not known. Panic-buying is self-perpetuating and triggered by seeing people shopping in bulk quantities and empty shelves, as they are not sure when this unprecedented crisis would stop, and as they also want to limit themselves from going out frequently.

Due to panic-buying caused by the Covid-19, the British retailers had imposed purchase limits on essential items on categories such as food, medicines, and hygiene products category to make sure everyone gets access to these items. While other sectors were witnessing a layoff and many employees being furloughed or being asked to volunteer for the job retention schemes announced by the British government. In March, the British retailers were calling to hire people to meet the rising demand. Tesco, the market leader, intended to hire 20,000 people. Asda announced the hiring of 5,000 people temporarily who lost their jobs amid the coronavirus crisis. Discounters, Aldi & Lidl, were looking to hire nearly 8,000 people. Morrisons was also looking to hire 3,500 people. The British government announced guidance and official quarantine rules to contain the spread of the Covid-19 pandemic on 23 March 2020. All the retail stores dealing in non-essential types of stores temporarily stopped trading to minimise people coming into contact and restrict the spread of the deadly pandemic.

As per the data from Office for National Statistics (ONS), there was a sharp fall witnessed in the monthly retail sales volume of 5.1 per cent in March 2020 , as the stores stopped trading, obeying the official government guidance during the coronavirus pandemic from 23 March onwards. However, in the monthly volume series in March 2020, Food stores and non-store retailing were the only sectors to show growth, with food stores seeing the strongest growth on record, at 10.4 per cent.

The value for food, household goods and other non-food items all showed increased sales for the month, up by 15.3 per cent, 18 per cent and 16.4 per cent, respectively in March 2020. These items recorded strong growths in comparison to the previous year. The value of food sales recorded a monthly growth rate of 101 per cent in March 2020, which was the strongest increase in comparison to the monthly growth rate of 2.6 per cent in March 2019. Supermarkets recorded an increase of 17.9% for online food orders in March.

In addition, non-store retailing increased by 5.1 per cent month on month in value terms along with month on month rise in the volume of goods by 5.9 per cent in March 2020. The non-store trading such as stalls and markets, and pop-up stores along with online stores, fall under the category of Non-store retailing.

Huge sales of 31.4 per cent in terms of volume were recorded at alcohol stores, and Supermarkets witnessed a strong surge in volume sales at 10.3 per cent. There was a huge surge in online orders as many stores ceased trading from 23 March 2020. However, some stores offered door to door delivery. As consumers switched to online platforms due to enforced lockdown, online sales as a percentage of Retail sales made a new high of 22.3 per cent in March 2020.

In comparison to the previous year period, Department stores witnessed a month on month growth of 47.4 per cent in March 2020. The stores dealing in Household goods recorded a month on month increase of 36.9 per cent in March. These stores also witnessed increased sales of fridge-freezers purchased online in March for stockpiling requirements.

According to the data from ONS, the online spending done by the consumers have nearly tripled in ten years. It has increased from just 4.9 per cent (2008) to 17.9 per cent (2018). Moreover, 54 per cent of senior citizens (aged 65 years and over) have shopped online in 2019. Nearly 90 per cent of adults used the internet daily in 2019. This was the period when the world was not shaken by the coronavirus outbreak. With the spread of this deadly virus and people forced to stay indoors, the dependence on internet has increased manifolds and it has become the only viable and safest option for people to order essentials. Also, the businesses have started reworking their business models as to how they can acquire, service and deliver to a customer through online platforms.

 

 


Disclaimer
The website https://kalkinemedia.com/uk is a service of Kalkine Media Ltd, Company Number 12643132. The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform.

 

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK