In an observation made which is hardly surprising now, the Chief of Mark & Spencer's Steve Rowe has stated that they have been observing fundamental changes taking place in the behaviour of Britons in their spending habits because of the pandemic. The company which is one of the well-known high street apparels brands in the country is witnessing a hit from two sides one from online retailing and the other from the lockdown induced work from home practice that has taken a significant hold in the country in the past couple of months. While online retailing is allowing people to shop from home without the need to go to stores, work from home practice is allowing people to work in their domestic casual wears and not high-end clothing they would otherwise wear if they were to go to their offices. In the recent past, the company has seen more sales coming from its grocery’s division M&S foods than any other division and that too most of which was online. The company, in its quest to adapt to the current situation, has decided to close as much as 120 of its stores in the near future and shift about a third of its apparels business online. In the recent past, online retailing has gained significant market size despite the pandemic induced lockdown, while most other industries have witnessed significant revenue drawdowns.
Online retailing the new normal
Online retailing industry has been coming up in a very big way in the recent past. The industry, with its humble beginning not more than two decades ago, has come a long way to challenge established shop-floor based retailing in almost all its segments. The industry which for a long time was a mere curiosity among its users who would casually shop for novelty items online, got a major boost when the pandemic came calling to the day to day lives. Since the lockdown has been in place, online purchasing has become the only means available to many people to get groceries and other essential provisions which get delivered at their homes while keeping them safe from infections. The threat of the pandemic is not yet over and the way the infection still continues to spread across the country, it will be a while before people are able to get on their day to day lives like before, even when the lockdown is withdrawn by the government, strict social distancing measures will be in place for a long time. The government in its directive to ease the lockdown in a three-phases has clearly stated that industries, where a big gathering of people are normally expected, such as supermarkets, will be the last which will be permitted to open. Thus, it is highly likely that online retailing will have its moment in the sun for a lot longer than previously expected.
Public perception regarding the future
The psychology of the people in the country has also been deeply impacted because of the pandemic. The lockdown conditions and the ensuing loss of business activity in the country are having a pessimistic impact. People are now more worried about their future livelihood and well being while living under the constant threat of the infectious virus. There had also been reports recently that several people from urban areas like London are looking to sell their properties there and planning to move to countryside locations for a better lifestyle while delivering their responsibilities to their workplace through the internet. It is highly likely that the attitude of the people will continue to evolve in the near to medium term future as they make better sense of the healthcare situation. The new normal may not be as vibrant as life was before the pandemic, but whatever state we evolve into, it is bound to bring about major changes the way we live our lives.
Future of high street retail
High street retail would also evolve into having their own online outlets. Many of the top brands and premium retail businesses in the country have already made that transition. What will suffer is the shop floor rental companies who had so enjoyed good revenues letting to big branded apparel companies. Like M&S, most other high street brands are also experiencing similar phenomenon with their customers’ habits and are also planning their future business strategies on similar lines. However, this is in no way an end of high street brands, the vanity factor of visiting a high street brand store will always continue to entice people, and big money will continue to be spent on shop floors which online retailing will find very difficult to match.
Counterview- a possible resurgence
There is still a contrarian view though, on the matter of floor shop retailing which some belief will never see an end. Contrarians believe that the human urge to go out of their houses, visit places where merchandise are displayed and to socialise is a profound human behaviour. No matter how convenient internet retail may become, it cannot douse these human urges. In fact, it is these urges around which most of the supermarkets, malls and high street fashion outlets have been modelled. Internet retail is more about convenience, which is also a very strong human urge, but this cannot overshadow other human urges. There is a strong belief that there is enough scope for both to co-exist and that the retail industry is a rapidly expanding industry where it is possible that both sections of the industry could scale new heights.
The current economic situation following the pandemic is unique in many respects and cannot be termed as normal. The online retail industry is currently performing a very critical service to the nation and hence is witnessing such huge volumes. When the dust on the pandemic settles, the situation may not be the same, and everything may get back to normal. Though some changes in the purchasing behaviour of people will take place as the CEO of M&S stated, it may not be such that could change the dynamics of the complete industry.
With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities.
Amidst this, are you getting worried about these falling interest rates and wondering where to put your money?
Well! Team Kalkine has a solution for you. You still can earn a relatively stable income by putting money in the dividend-paying stocks.
We think it is the perfect time when you should start accumulating selective dividend stocks to beat the low-interest rates, while we provide a tailored offering in view of valuable stock opportunities and any dividend cut backs to be considered amid scenarios including a prolonged market meltdown.