Online demand soared during the COVID-19 lockdown in the UK, with online sales growing by year-on-year 33.1% in April and 59.0% in May. Of course, concerns around the virus and constrains on consumer movement were the major driver of this, but equally the mass closure of non-essential stores also played into this heightened online demand. However surprisingly with stores now open, this demand has not eased – with online sales growing 73.4% year-on-year in June.

This indicates that the boost felt by the online channel will not be limited to lockdown, and Mintel expects that the online retail channel will see the fastest growth (+23.5%) for over a decade in 2020, accounting for a record 24.7% of all retail sales. Naturally, online demand should ease as concerns and infection rates ease – but this forecast expects demand in the second half to remain higher than where we would have expected it to be pre-COVID-19.

As a channel, online was already the growth area in UK retail prior to COVID-19. However, it is not impervious to the challenges faced by other sectors and channels. The heightened expected peak in demand in Q4 will put significant strain on logistical networks. The grocers experienced this during lockdown and were forced, at significant cost, to increase their order capacity. Many non-food players also suffered, with the likes of Next having to take its website down to make working conditions safe, and this pressure will return in Q4 as Christmas spending grows. Retailers will need to prepare for this, spread promotional activity out to minimise chokepoints and utilise click-and-collect networks to ensure they can serve the demand in a critical time of the year.

Longer term, the major opportunity for the online sector is that COVID-19’s impact is likely to leave it forever enlarged. Indeed we expect that by 2024 online will account for 27.5% of all retail sales, up from 25.8% in our pre-COVID-19 forecasts. This will be driven not by bringing new shoppers into the channel, as over nine in ten internet users in the UK shopped online prior to COVID-19, but by expanding the repertoire of products purchased online and the frequency at which they are purchased. In particular, this brings an opportunity in categories such as beauty and personal care and home, which have traditionally had a lower penetration of sales online compared to electricals and fashion.

• The impact of COVID-19 on the online market and online shopping behaviour.

• The breakdown of the online market by category and an overall forecast of sales including the expected impact of COVID-19.

• Who shops online and how frequently and how COVID-19 has and will shift this.

• Devices preference when shopping, including a look at the first ‘mobile-first’ generation.

• The rise in prominence of social media not simply as an influencer but as a trading platform, and how COVID-19 will accelerate this.

This update on the impact that COVID-19 is having on the market was prepared on 1 September.

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks.

The Health Protections Regulations 2020 came into effect on 15 June allowing the reopening of all non-essential stores in England as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4 July, with many beauty businesses following on 13 July.

From 24 July, it became mandatory to wear face coverings in shops and supermarkets. Rules on travel remain fluid: from 10 July, travellers from more than 50 “low risk” countries no longer had to self-isolate for 14 days, but on 28 July the removal of Spain from this list of low-risk countries dominated headlines in the UK, whilst on 15 August France and select other European nations were also removed.

During July and early August there have been a series of local lockdowns in cities for example Leicester, Luton, Aberdeen and a specified area within the North West region of England. On 9 September, new guidelines were announced in England as a reaction to rising numbers of COVID-19 cases. The major change was a tightening of restrictions on social contact, with people only allowed to socialise with groups of up to six people who they don’t live with.

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty means that there is wide variation on the range of forecasts however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

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