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Summary
- On 24 July 2020, a new rule had been enforced by the British Government, making it compulsory for the citizens to wear a face cover.
- As the number of cases of coronavirus has subsided, and the United Kingdom has been facing a low rate of infections, the British Government has eased the lockdown restrictions.
- The number of supermarket trips was lower by two million than what would have usually been expected in the week after the rule was adopted
- Grocery sales growth declined to 14.4 per cent year on year during the 12 weeks to 9 August 2020 as sales began to fall away from the heights of the lockdown period.
A new strain of coronavirus, Covid-19, originated in China in December 2019. It has since spread globally and was first identified in the United Kingdom in February 2020, with cases increasing drastically for the next two months following February. The outbreak was officially declared a pandemic on 11 March 2020 and has had a significant impact on the global economy since then.
Consumers had been stockpiling antibacterial and toiletry products, and food products with long shelf life, putting a strain on the industry's supply chain. Following the social distancing measures put in place by the Prime Minister, retailers made changes in how they operated, reacting to the new norm that Covid-19 was resulting into. Some operators reacted by introducing maximum purchase limits to stop customers from purchasing items indiscriminately. Timing on supermarket deliveries had been relaxed to help retailers respond to increased consumer demand.
As the number of cases of coronavirus subsided and the United Kingdom has been facing a low rate of infections, the British Government eased the lockdown restrictions.
To know more, do read: PM Announces Further Relaxation in the Lockdown Restrictions- Cineworld Group in focus
With the re-opening of the community, new rules and regulations have come into force. On 24 July 2020, a new rule had been enforced by the British Government, making it compulsory for the citizens to wear a face cover. As per the government, a face covering is strongly encouraged in public spaces such as banks, post offices, shops, and supermarkets. But few prominent retail chains had said that they would not be enforcing the wearing of face covers as the new guidelines for the same came into power in England. A £100 fine was also levied for the ones not abiding by the law in England.
Also read: Supermarkets Opposing the New Face Mask Rule In England
As per the latest figures from Kantar, a market researcher, grocery sales growth declined to 14.4 per cent year on year during the 12 weeks to 9 August 2020 as sales began to fall from the heights of the lockdown period. Consumers had spent £9.7 billion on grocery over the latest four-week period to 9 August 2020, which was the lowest since February, although still considerably higher than pre-pandemic levels.
According to Kantar, all the major retailers had registered an overall growth in take-home sales in the latest 12-week period, except Ocado, that saw the growth slowing down compared with July. Morrisons was the fastest-growing big four retailers, with its sales increasing by 16.0 per cent, resulting from the strong performance of its supermarket stores. Tesco growth surged 12.8 per cent, Sainsbury’s up 10.9 per cent and Asda up 9.5 per cent.
Iceland was the second fastest-growing retailer with 29.2 per cent growth, its market share increasing to 2.4 per cent. Meanwhile, Co-op saw an increase in its share to 7.1 per cent, with the growth of 22.4 per cent. Lidl sales were up 15.7 per cent and Aldi up 12.7 per cent. The highest overall growth was that of Ocado, which was up 45.5 per cent year on year.
Meanwhile, online sales rose 92 per cent, contributing to almost 13 per cent of all grocery sales. The above-mentioned period saw the introduction of mandatory face coverings for visiting shops in England. According to Kantar, the number of supermarket trips was lower by two million than would have usually been expected, in the week after the rule was adopted, and presently only 50 per cent of the shoppers say they feel safe in stores.
The Consumer Insight Director of Kantar, Charlotte Scott, said that though the things are not back to normal, the data is evident of the fact that the grocery market is seeing a gradual softening of the more extreme lockdown trends. The easing of lockdown restrictions across the country indicates that the shoppers are less inclined to stock up their cupboards with regular large trips.
Let’s now take a look at the stock price movement of a few large retail chains in the UK.
Tesco PLC (LON: TSCO) stock was trading at GBX 226.60 on 19 August 2020 at 1:25 PM, down by 0.75 per cent from its previous close of GBX 228.30. The 52-week low/high price was GBX 211.20/258.90. It was having a market capitalisation (Mcap) of £22,358.55 million. The volume traded at the time of reporting was GBX 3,648,124. The company reported a negative return on price, which was 10.75 per cent on a YTD (Year to Date) basis.
J Sainsbury PLC (LON:SBRY) stock was trading at GBX 187.55 on 19 August 2020 at 1:20 PM, down by 0.72 per cent from its previous close of GBX 188.90. The 52-week low/high price was GBX 174.95/235.80. It was having a market capitalisation (Mcap) of £4,199.92 million. The volume traded at the time of reporting was 2,116,744. The company recorded a negative return on price, which was 18.61 per cent on a YTD (Year to Date) basis.
Ocada Group PLC (LON:OCDO) stock was trading at GBX 2,380.00 on 19 August 2020 at 1:22 PM, down by 0.75 per cent from its previous close of GBX 2,398.00. The 52-week low/high price was GBX 1,064.00/2,398.00. It was having a market capitalisation (Mcap) of £17,935.41 million. The volume traded at the time of reporting was 558,127. The company recorded a positive return on price, which was 90.39 per cent on a YTD (Year to Date) basis.
Morrison Supermarkets PLC (LON:MRW) stock was trading at GBX 198.95 on 19 August 2020 at 1:28 PM, up by 1.40 per cent from its previous close of GBX 196.20. The 52-week low/high price was GBX 164.20/208.60. It was having a market capitalisation (Mcap) of £4,724.83 million. The volume traded at the time of recording was 2,319,932. The company reported a negative return on price, which was 3.06 per cent on a YTD (Year to Date) basis.
Conclusion
As per the data of the Office for National Statistics, July saw the second month of growth in retail sales as lockdown measures eased and demand gradually began to return in some places. But, the figures to four months to August witnessed a decline in the growth due to the face-covering rule imposed by the government. Some of the shops are still struggling as footfall has not yet picked-up, with many people reluctant to go out, and fewer impulse purchases.
