UK Retailers Witness Surge in Sales Amid the Lockdown

UK Retailers Witness Surge in Sales Amid the Lockdown

Summary

  • Retailers especially the online retailers have witnessed robust sales
  • Naked Wines, Tesco recorded double-digit growth in sales during the lockdown
  • Online sales as a percentage of retail sales were at an all-time high during the lockdown

While other sectors were witnessing layoffs and many employees were being furloughed or being asked to volunteer for the job retention schemes announced by the British government, the British retailers went on a hiring spree. Tesco, the market leader, announced its intention to hire 20,000 people during the pandemic. Asda announced hiring 5,000 people temporarily who lost their jobs amid the coronavirus crisis. Discounters Aldi & Lidl aimed to hire nearly 8,000 people. Morrisons was also looking to hire 3,500 people.

Industry experts believe that online retailers are likely to continue recording strong growth in the times to come. The demand was hugely driven by the unprecedented crisis, which resulted in ramp- up of additional workforce and internet operations by the retailers to serve millions of shoppers as fears of Covid-19 still haunts the potential customers.

The exclusive wine company, Naked Wines Plc (LON: WINE) reported growth in revenue of 14 per cent year on year to £203 million in the fiscal year 2020. Having attained 81 per cent of revenue growth in the initial months of the current fiscal year (FY21), the company had an ideal start to the new year.  The company reported a profit after taxation of £8.2 million.

The company seems to have braved the impact of Covid-19 with great momentum primarily through its online business model, which is ideally suited for the current climate. The company is expected to deliver a better outcome for shareholders through long-term value appreciation by leveraging on the growing online wine market.

Tesco Plc reported growth in online sales by nearly 49 per cent. Tesco Plc (LON: TSCO) has reportedly doubled its number of delivery slots to more than a million in recent times. In addition, J Sainsbury Plc (LON: SBRY) and Waitrose Limited are also likely to increase their number of delivery slots in the upcoming months.

Similarly, Ocado Group plans to raise £1 billion to cater to the surge in online orders amid the unprecedented crisis induced by the novel coronavirus.

People are still not confident and are avoiding going to public places. They practice social distancing (keeping 2 metre distance from another person) and are more cautious than before. The retailers are in great demand amid the coronavirus crisis. The retailers witnessed a huge surge in demand for the food staples, processed foods, Personal care, Household products and Home Entertainment during the lockdown induced by the pandemic. In some instances, panic-stricken people were seen stockpiling. To tackle this situation, the British retailers had imposed purchase limits on items so that everyone gets access to these items.

As per the data from Office for National Statistics (ONS), the monthly retail sales volume fell sharply by 5.1 per cent in March 2020 as the stores ceased trading following 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 increased sales for the month 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.

The effort made by the retailers to keep their supply chain intact in these unprecedented times is commendable. For instance, agricultural production has remained unfazed by the outbreak of pandemic and therefore has a negligible impact on the grape harvest and wine production.

As the pandemic washed up the shores of the UK, the economic activities were halted in most of the sectors. Most of the businesses quoted on the London Stock Exchange created new bottoms during the mid of March.

  • Tesco Plc created a bottom of GBX 211.20 on 12th March 2020. Since then the stock has delivered a price return of 7.20 per cent.
  • Ocado Group Plc’ stock created a bottom of GBX 1,077 on 12th March 2020. Since then the stock has delivered a price return of 84.68 per cent.
  • Naked Wines Plc created a bottom of GBX 204.50 on 16th March 2020. Since then the stock has delivered a price return of 98.53 per cent.

 

According to the data from ONS, online spending by consumers have nearly tripled in ten years. It has increased from just 4.9 per cent (2008) to 17.9 per cent (2018). In addition, 54 per cent of senior citizens (aged 65 years and over) have shopped online in 2019. Nearly 90 per cent of adults have used the internet daily in 2019. This data belongs to the pre-crisis era. 

In the post-crisis era, people are forced to work remotely and stay indoors. The reliance on the internet has increased manifolds as it has become the only viable option for people to order the consumables and has changed the shopping habits of the customers. Also, the businesses are retuning their business models as to how they can acquire customers, provide service, and deliver through online platforms.

 

 


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