Table of Contents
What COVID-19 means for UK Retail
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- Short, medium and long-term impact on the industry
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- Figure 1: Short, medium and long-term impact on the industry
- Short-term
- Medium-term
- Long-term
- Opportunities and Threats
- Short term channel shift has significant legacy impact
- COVID-19 recession will polarize finances, hitting the mid-market
- Sourcing and lead times to be placed under greater scrutiny
- Necessary changes at store level will leave a much changed sector
- Impact on the market
- Record decline for the retail sector in 2020
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- Figure 2: All retail sales, non-seasonally adjusted including VAT, market size and forecast, 2014-2024
- Impact on key consumer segments and shifts in behaviour
- Retailers with a younger shopper base may be hit harder
- Greater engagement in the online channel from older generations
- A focus on local communities will extend far past the lockdown
- The staggered return of footfall
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- Figure 3: Primark Cambridge, 15 June 2020
- How a COVID-19 recession will reshape the market
- The COVID-19 recession will be a step too far for many retailers…
- … and for many landlords
- Value-for-money will become even more important
- Trust in pricing must be re-established
- COVID-19: UK context
The Impact of COVID-19 on Consumers
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- Anxiety levels align with case curve...
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- Figure 4: Mintel COVID-19 exposure anxiety index, 28 February – 3 June 2020
- … but consumers remain anxious about their health
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- Figure 5: People’s level of concerns about the risk of being exposed to the coronavirus, 28 February – 3 June 2020
- COVID-19 concerns by demographics
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- Figure 6: Proportion of consumers showing the highest degree of concern (4 or 5 out of 5) regarding the risk of being exposed to the coronavirus, by age, 28 February – 3 June 2020
- UK begins to soften lockdown measures
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- Figure 7: Government COVID-19 lockdown exit strategy, published 11 May 2020
- Lockdown fears moderate
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- Figure 8: People’s level of concerns about how the outbreak might affect their lifestyle, 28 February - 3 June
- A bleak outlook for the economy
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- Figure 9: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 28 May – 3 June 2020
- Consumers cut back outgoings, and add to savings
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- Figure 10: How consumers have been affected or changed their behaviour as a result of the outbreak, 21-28 May 2020
- Household finances hold steady for most
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- Figure 11: Changes in financial situation since the start of the COVID-19 outbreak, 21-28 May 2020
- COVID-19 is yet to meaningfully affect most households’ well-being…
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- Figure 12: The financial well-being index, January 2015-May 2020
- …but confidence for the year ahead plummets
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- Figure 13: Consumers’ financial confidence for the coming year, May 2020
- Middle age groups feel particularly vulnerable…
- …COVID-19 support package key for self employed
The Impact of COVID-19 on Retail Sales
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- Spending activity has dropped dramatically
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- Figure 14: COVID-19 tracker: intentions to spend in the next month, 28 March -3 June 2020
- Store closures and lower footfall means a historic decline in 2020 sales…
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- Figure 15: All retail sales, non-seasonally adjusted including VAT, market size and forecast, 2014-2024
- …but headline figures mask huge differences between key categories
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- Figure 16: The estimated impact of COVID-19 on all retail sales, 2019-21
- Impact on grocery sales
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- Figure 17: All food retail sales, non-seasonally adjusted including VAT, market size and forecast, 2014-2024
- The impact of COVID-19 on non-foods will be significant
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- Figure 18: All Non-food retail sales, non-seasonally adjusted including VAT, market size and forecast, 2014-2024
- Specialist fashion sector to be significantly hit
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- Figure 19: Estimated annual retail sales growth, by specialist category, 2020
The Impact of COVID-19 on Online Retailing
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- Significant demand has shifted to online, but this is causing strain
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- Figure 20: COVID-19 tracker: online use, 23 April – 3 June 2020
- Online will have a record 2020
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- Figure 21: All online retail sales (inc. VAT), market size and forecast, 2014-2024
- Online will account for around a quarter of sales in 2020
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- Figure 22: Online share of all retail sales (ex-fuel), 2014-2024
- Store-based players regain share, due to the grocers
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- Figure 23: Share of all online retail sales, by type of retail operation, 2010-20
- Social platform shopping will see a legacy boost
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- Figure 24: COVID-19 Start-up: Send a Negroni, June 2020
The Impact of COVID-19 on the Grocery Sector
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- COVID-19 drives peak in in-home food and drink expenditure
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- Figure 25: All grocery retail sales (ex. fuel, inc. VAT), market size and forecast, 2014-2024
- A hunt for value could undermine specialists’ sales
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- Figure 26: Forecast % change in sales for the main components of grocery retail sales, 2020
- The cost of trading during COVID-19
- The longer-term legacy of stockpiling
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- Figure 27: The effects of stockpiling, March 13 2020
- A repeat of the post-financial crisis emphasis on self-reliance
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- Figure 28: Robert Dyas, the veg trug, April 2020
- Longer-period for in-home F&D brings opportunity for meal solutions
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- Figure 29: Tesco meal solutions, June 2020
- Online finds its second wind of growth
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- Figure 30: Ocado response to increased demand, March 2020
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- Figure 31: Cross-town collective, March 2020
- A focus on the community brings opportunity, and potentially critique, for the grocery sector
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- Figure 32: Shifts in priority due to COVID-19, 7 May – 14 May 2020
The Impact of COVID-19 on the Fashion Sector
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- Likely to be the hardest hit retail category by COVID-19 in 2020
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- Figure 33: All fashion specialist retail sales, market size and forecast, 2014-2024
- The long-term view
- Fashion hit harder by social distancing than by store closures
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- Figure 34: Reasons for buying new clothes, August 2019
- Some opportunity in ‘at-home’ and leisure wear
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- Figure 35: Little Mistress NHS Kindred Rainbow thank you NHS face mask, May 2020
- Online demand ticks-up but specialists struggled to cope with demand
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- Figure 36: Next homepage on reopening, April 2020
- Technology playing a greater role in the shopping experience
- Integration of tech solutions will pay off for multichannel shoppers
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- Figure 37: John Lewis Personal styling service, April 2020
The Impact of COVID-19 on Home Retail
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- COVID-19 will have significant legacy impact on home retail specialists
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- Figure 38: Breakdown of household goods stores retail sales, 2019
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- Figure 39: All home specialist retail sales (inc. VAT), market size and forecast, 2014-24
- Greater online penetration brings new store opportunities for furniture retailers…
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- Figure 40: John Lewis AR sofa view, March 2020
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- Figure 41: Ikea Planning Studio Tottenham Court Road, November 2019
- …but also poses the question of store function
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- Figure 42: Currys PC World Shop Live, April 2020
- Repairs, services and second hand stand to benefit from recessionary behaviours
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- Figure 43: Ikea Spain, ‘save our furniture’, May 2020
- Shift in working habits brings opportunity for household specialists
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- Figure 44: Ministry of Makers, collapsible furniture, May 2020
The ‘Next Normal’ of In-store Shopping
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- There is demand for in-store shopping to resume
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- Figure 45: What consumers are looking forward to when social distancing measures are eased, 7-14 May 2020
- However we know footfall will still be significantly impacted
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- Figure 46: Time spent in store, 16 April- 3 June 2020
- Location will be crucial
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- Figure 47: Changes in local shopping, 16 April-3 June 2020
- Key to ensuring impact on footfall is limited is reassuring consumers
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- Figure 48: Aldi – automated ‘traffic light’ store entrance, May 2020
- Hygiene a crucial concern
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- Figure 49: Co-op face covering sign, May 2020
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- Figure 50: COVID-19 behaviours when shopping for groceries, 28 May – 3 June 2020
- A further push toward a ‘cashless’ future
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- Figure 51: Attitudes towards cash use, 16 April – 3 June 2020
What We Can Learn from Previous Slowdowns
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- High-ticket and discretionary purchases suffered in the last recession
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- Figure 52: All retail sales (ex-fuel, Ex VAT), by broad category, 2008-2014
- Non-food discounters were among the big winners in the last recession…
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- Figure 53: Compound annual growth rate in non-food retail sectors, 2008-2014
- …as was fast fashion
- Recessions can accelerate structural change
- Financial crisis was too much for some, and the same will be true again
- Even the survivors will be reshaped by the coming recession
- Yet more turmoil for physical retail space…
- …and the prime candidates to fill empty retail space are facing their own challenges
Lessons from Other Regions
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- In China, the first country to exit lockdown, footfall has slowly returned
- In Germany a similar trend is apparent
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- Figure 54: Google COVID-19 Community Mobility Reports, Germany (national) 15 February – 7 June 2020
- Recovery in footfall much slower in Italy
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- Figure 55: Google COVID-19 Community Mobility Reports, Italy (National) 15 February – 7 June 2020
- What this means for the UK
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Market size
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- Figure 56: Major retail categories, broken down by SIC code, 2020
- Abbreviations
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