AUS
NZ
UK
CA
USA
IND
Summary
- A survey by BRC and ShopperTrak said that shopper visit declined by 42 per cent in annual terms for July 2020.
- In the first half of 2020, administration and job cuts announced at high street retailers have surpassed the numbers for entire 2019.
- Shopping behavior is changing tremendously with rise in online shopping.
The coronavirus pandemic has brought an unparalleled crisis to businesses that they have seen in their living memory. This is all the more true for the companies involved in non-essential items having a significant presence on the high street.
Already under pressure from pre Covid-19 times, most of them are now struggling to survive after they were allowed to open doors to customers with safety measures in place. Apart from the schemes and announcements on loans and furlough, the government has taken several steps to help boost their businesses. But according to findings of a survey released on 7 August 2020, the number of shoppers visiting high street is considerably lower than normal for this time of the year. However, the report said that after the reopening of pubs and restaurants, more British shoppers returned to high street in July 2020.
Also read:
The Pandemic Hastens the long due Transition in The UK Retail Sector
Is Retail Landscape changing for good?
Key highlights of the report
In a report that presents monthly figures, the British Retail Consortium (BRC), a trade body and ShopperTrak, a market research company, mentioned that shopper visit declined by 42 per cent in annual terms for July 2020. This number is a rise over June 2020 that recorded a 63 per cent slide in footfall to the stores at the high street. This small increase in numbers is driven by the reopening of pubs and restaurants on 4 July 2020. The future business prospects for the stores in high street is still unsteady as many of the well-known brands have found it tough to generate sales and announced job cuts as cost cutting measures and strategy to become a leaner business. It was on 15 June 2020 that stores selling non-essential items in England were reopened for the public.
In June 2020, the sales in retail sector reached a similar level to pre-pandemic times of June 2019, according to official data. The spurt in online shopping is attributed to a majority of the recovery. The rest could be because of the extra spending at the supermarkets as people ate out less. Defining the crisis as adverse business period for the physical retailers, the report put forward the view that it is too early to predict how well the retail segment will pull itself from the crisis during coming months. A fast increase in consumer demand would step up the retail footfall in the UK, which is improving slowly in comparison to other countries in Europe.
It is important to reflect on the key findings of the report released for last month. The decrease of 63 per cent in footfall recorded in June 2020 was 19 per cent above May 2020. During that time, the retailers hoped that reopening of pubs and restaurants would be helpful in making the shoppers visit the high street. To encourage people to visit restaurants and cafes, the government announced ‘eat out to help out’ scheme to run for the month of August 2020 and provide up to £10 off for a dine-in meal (discount to be funded by the government) on Mondays, Tuesdays, and Wednesdays. It remains to be seen in next month’s report if this scheme had helped to ramp up the retail footfall.
Also read:
Retail Sales Volume and Value Increases in the Month of June in the UK
Retail industry faces ‘COVID-19 hangover’ as consumers spend with caution
UK Retailers Scale Back Discounts in July As Demand Picks Up
A walk through the UK high street business
In the times of the coronavirus pandemic, many retailers on the high street can be seen under deeper financial constraints. This is despite a small surge in demand that resulted in sales in initial days after they pulled up their shutters for the shoppers. Rise in unemployment has forced people to trim down their shopping list for non-essential and luxury items. Adding to this, people have increased their purchasing on online stores due to work from home schedules and fear of catching the Covid-19 infections while visiting the stores. The government’s guidelines regarding wearing masks, social distancing, and sanitisation has increased the day to day operating cost of the retailers, but is yet to add significantly to the shopper’s confidence.
Since reopening several of them reported falling into administration and announced huge job cuts. Many of the prominent retailers revealed decisions of either temporarily or permanently closing their stores. Many experts agree that a section of high street retailers were financially pressed even before the outbreak of the pandemic, which has accelerated the losses and forced them to take such tough and extreme decisions. The long story of business losses is most likely to be continued in coming times, compelling them to walk out of the high street.
The Local Data Company, a retail location insight company, collected data from more than 600 town centres to find out that only one in five English stores traded through the lockdown. The high street retailers comprise of brands that deal in clothes, footwear, electronics, music, jewelry, department stores, books, and toys, among others.
High street retailers - administration and job cuts
Many industry insiders point out that overheads and other costs are not so easy to manage during such times of crisis when sales are at an all-time low due to a steep decline in footfalls. Given the importance of scale, many cash-strapped retailers opted to walk out of the high street forever. The Centre for Retail Research (CRR) has presented a list of the retailers that went into administration during the first six months of 2020 outnumbered the whole of 2019. In the first half of 2020, as per data from the Centre for Retail Research (CRR), 2,123 stores with 49,200 staff and run by large and medium-sized retailers fell into administration. In 2019, around 2,051 stores employing 45,500 people went into administration. Though many jobs would be saved due to retailers striking rescue deals with their new owners, the numbers definitely talk of the impact that the pandemic has brought to the high street.
Some of the names put out by CRR for retailers that fell into administration in the first six months 2020 are well-known stores like Oliver Sweeney Group (physical retail arm), Peter Jones, Norville Group, Bensons for Beds, Harveys Furniture, TM Lewin, Bertram Books, Go Outdoors, Lee Longlands, Oak Furniturelans, Le Pain Quotidien, Monsoon, Quiz, Victoria’s Secret (UK arm), Aldo, Johnsons Shoes, Antler, Oasis and Warehouse, Debenhams, Cath Kidston, Autonomy Clothing, Lombok, BrightHouse, Laura Ashley, Soak.com, company behind the outlet division of TJ Hughes, Hawkin's Bazaar, Ashbury Furniture, Beales, Hearing Health and Mobility, and Houseology.
Rise in online shopping
The lockdown imposed to curb the spread of the coronavirus has significantly changed the way UK consumers have shopped by adding items such as electronics, furniture or DIY supplies to their baskets, which they would have otherwise preferred to buy from a physical shop. Retail industry insiders have analysed that this crisis is likely to bring a long-term inclination towards online shopping. Be it the ease of shopping, payment, and delivery, discounts offered by ecommerce companies, or fear of infections outside home, the brick and mortar stores need to adopt necessary strategies like providing more experience driven shopping at their stores, either develop a online operation or expand if they have an existing one, among other ways to induce demand in the customers. A study done by ACI Worldwide, a payments software company, recorded that the ecommerce transactions in the UK have seen a 168 per cent rise in May 2020 compared to the same period in 2019. This spike was driven mainly by rising online sales of electronic items, DIY supplies, home furnishings, and sportswear, etc.
Also read:
The United Kingdom to Enact New Consumer Laws as Online Retailing Expands in The Country
Conclusion
Many of the high street retailers are out of cash and demand for their products is likely to remain subdued till the overall economy starts recovering with supportive employment numbers. Several experts suggest that these times of crisis call for a focused and comprehensive plan from the government to support the retailers dealing in non-essential item. If there are more closures and job cuts, the country would have to face a serious concern around unemployment. It would be interesting to see if short-term schemes like ‘eat out to help out’ have contributed to Britishers visiting the high street retail stores.
