The COVID-19 pandemic meant that 2020 was a unique year in the retail sector for a number of reasons but in particular, it forced consumers to shop in new ways. The positive for stores is that 60% of consumers have missed shopping as a day out. With stores reopening, retail has cleared the first hurdle to more ‘normal’ trading, but with 42% of consumers saying that closures of pubs/restaurants/cafes has discouraged them from visiting shopping areas, it will not be until all consumer facing businesses are back that we will see what footfall truly looks like post-peak pandemic.

The biggest impact of COVID-19 to date has been the greater reliance placed on online shopping. All online sales grew by 46.9% to £110.9 billion in 2020, taking a record 27.5% of all retail sales. 44% of consumers have shopped more from retailer websites because of the pandemic, and the pandemic has accelerated emerging trends – such as social media shopping which 15% of consumers have done more of as a result of the pandemic. With 27% of consumers expecting to do more online shopping post-peak of the pandemic compared to pre-pandemic, this extended period of online use will lead to a legacy of greater online penetration throughout the retail sector moving forward.

If online was the ‘winner’ of the pandemic, in-store trade, and in particular non-food in-store trade, has lost out. Non-food store sales declined by a record 10.6% in 2020, and when online contributions are taken out, in-store non-food sales declined by an estimated 24.3%. Some categories, particularly fashion, were hit harder than others but such a hit naturally meant some big-name businesses failed and we expect that it will take until at least 2023 for the sector to recover to pre-pandemic levels.

The pandemic also forced shopping behaviours to become more local, with a fifth (21%) of consumers shopping more in-store in their local area and 46% shopping less outside of their local area because of the pandemic. With changes to working habits and continued consumer caution there remain significant opportunities in more localised purchasing moving forward – particularly within the smaller/chain and independent sector which 28% of consumers say they will shop from more post-peak of the pandemic compared to before the pandemic.

Key issues covered in this Report

  • The impact of COVID- on retail sales, including forecasts for online, grocery, non-food, fashion and household goods stores.

  • The impact of COVID-19 on macro-economic factors, including consumer confidence and household finances.

  • The impact of COVID-19 on consumer behaviour, including spending priorities, lifestyles and future behaviour.

  • The impact of COVID-19 to-date on shopping behaviour.

  • The legacy impact of COVID-19 on shopping behaviour, including channel use and future intentions.

  • What consumers want from stores moving forward.

COVID-19: Market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

Despite these restrictions, however, case numbers continued to increase. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the re-opening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March, and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licenced for use in the UK, the government aimed to offer a first dose of the vaccine to 32 million people by mid-April.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Fiscal Sustainability Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021, and 7.3% in 2022.

GDP isn’t expected to return to pre-COVID levels until the second quarter of 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster than expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in the fourth quarter of 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

Back to top