Retail Sector Up for An Arduous Time Ahead Despite A Surge in Online Volume

The Retail industry in the UK has registered a slowdown in consumer spending by more than a quarter in the first two weeks since the lockdown was announced by the prime minister. Across the value chain right from the small retail shops to high-end supermarkets, all have been reporting dwindling revenue numbers. The only respite is being seen at the online retail companies and large retail supermarket chains who also have an online retail presence and who are able to deliver goods to the consumer at their doorsteps. In the online retailing platform also only the food and toiletries items have been seeing a surge in demand while the turnover of every other goods remained on the back foot. It seems the British consumers are giving more priority to essential spending now and have postponed their non-essential spending to the future when the threat of the pandemic has subsided. There is uncertainty in the minds of several of the economically weak citizens regarding their employments and livelihoods as no one is able to tell for certain how long this traumatic period will last, which seems to have an overwhelming effect on their purchasing decisions. The pandemic has till now infected close to 100,000 people in the country out of which more than 12,000 have already died. People have been forced to live in lockdown as a containment measure, which has resulted into footfall into supermarkets and high street retail outlets becoming almost nil, leading to massive revenue fall for these segments of the retail sector.

The British Retail Consortium (BRC) the representative body of the British retail sector reported on 16^th of April that in the last two weeks of March retailers in the country saw a 27 per cent fall in their revenue figures which largely coincided with the government lockdown announcement made on the 23^rd of the month. The lockdown had barred all non-essential stores to be shut till further orders. The most impacted from the government instructions were the high street stores retailing high margin products. The BRC’s chief executive Helen Dickinson while commenting on the report stated that while volumes in the Online retail space may be high but the overall sales figures in terms of value in the entire retail value chain have taken a severe beating. The BRC report further stated that the sales figures for the first five weeks to April 4^th this year were down by 4.3 per cent compared to the same period last year. This slump in monthly sales in the slowest that has been recorded since 1995 after the distortions pertaining to Easter and Black Friday had been removed. The like-for-like sales figures, which is an important figure for traditional retailers, was also down by 3.5 per cent for the period with several of the large and reputed fashion retailers falling into distress because of the lockdown. The overall industry, however, is doing much better compared to many other industries which are experiencing comparatively sharper fall in their revenue levels because of the lockdown.

Data from banks, credit card and debit card companies have also confirmed the reduced spending patterns of the people. The monthly spending patterns reported by Barclays of its customers shows that its customer spending in the month of March this year is down 6 per cent, which is the biggest slump recorded by the bank since 2015. The BRC report also contained the results of a survey that tries to access the outlook of the consumers about the future and how will the economy shape up after the pandemic is over. Nearly 40 per cent of those surveyed had a weak outlook, and only 25 per cent were confident that the future of the economy was bright.

It is worth mentioning here that the office for the Budget responsibility, the official budget watchdog of United Kingdom had reported on 15 April that the British economy could shrink by as much as 35 per cent during the April and June this year and by 13 per cent for the full year 2020. The forecaster, while dwelling deeper on its estimates had stressed that the lockdown conditions could lead to a situation where nearly 10 per cent of the country’s workforce could be rendered jobless. The retail sector is one of the largest employers in the country employing semi-skilled as well as skilled people in every level of their business activities. The lockdown induced slowdown has meant that footfall across store floors have dried up rendering to no work being tendered to these employees. The result is that many of the retail companies have either furloughed or are actively contemplating furloughing their staff until better conditions come to prevail.

The problem with the retail sector is not isolated to the United Kingdom but is being witnessed across the world. In the United States also, the footfalls across large retail stores have fallen drastically, while the sales figures of online retailing companies have been on their peak. The panic buying by consumers in the initial days of the pandemic when the lockdown conditions were anticipated but not implemented, led to an initial surge in the number of footfalls and the store shelves being emptied like never before, but later on, when movement restrictions were put in place, online portals were the only means to push through sales. On the production side also, enhanced restriction on movement of men and materials meant that producers of essential goods are now facing difficulty in meeting the enhanced demand and on the transportation side supply vehicles are working overtime to deliver on time.

The longer the pandemic phase is going to last, the more stressful it is going to be for the businesses as well as the citizens in the country. With the growing number of infections and the rising death toll, it is highly likely that the lockdown conditions will be extended in the country. The government can also do only so much to elevate the sufferings of the citizens; it is imperative that an early solution is found to put a lid on the spread of this pandemic so that the world can be back to normal activity levels.

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