Is UK Retail Recovering from COVID-19?Could shops survive despite the coronavirus fallout after all?

One sector that has taken more than its fair share of knocks over the last few years is retail.

The sector has had to deal with innumerable crises­­ from high street closures to the potentially terminal impact of the internet.

So the last thing the sector needed was a global pandemic which threatened to sound the death knell for physical stores.

But as we approach two years since the first UK lockdown, how has UK retail fared? And could we be seeing the start of a recovery?

What was the impact of COVID on retail?

When lockdown hit in March 2020, footfall plummeted to its lowest level on record. Shopping centres and high streets became ghost towns as we were forced to shop locally at places we rarely visited or even knew existed.

To put the migration to online into perspective, it took online 7 years to get from 10% of retail sales to 20% in February 2020. However, it took just two months to get from 20% to 30% in April 2020.

The only retail sector that appeared in any way to benefit was grocery as the general public panic-bought toilet rolls and pasta.

Elsewhere, retailers classed as “essential” (mostly situated on out-of-town retail parks) took advantage of having little to no competition for consumer spend. The rest had to learn how to sell items online—and fast.

So does this mean consumers have deserted shops now that we can buy anything at the click of a mouse?

Footfall improving, online growth reducing

Looking back to pre-pandemic figures, it seemed inconceivable that footfall growth would better that of digital sales, such was the inexorable trend towards the latter.

But online’s share of total retail has reduced compared to the peak lockdown volumes. Online sales accounted for a 25.9% share of total UK retail sales in September 2021, representing a significant reduction compared to the peak 37.6% recorded in January.

With regard to shopping visits, according to analytics company Springboard, October 2020 footfall was down almost a third on 2019. However in October 2021, footfall had declined by only 13% compared with 2019, a significant improvement.

In addition, according to Barclays, non-essential spend in October 2021 was up 14% on the same period in 2019.

The new era of the department store

The recent demise of Debenhams and House of Fraser announcing the closure of its flagship store on Oxford Street after 142 years have been symptomatic of the declining role of the department store. However, there are still signs of life in the sector.

Primark still happy to stick to physical stores

Primark have for many years been the poster boy of physical retail in the UK. Stores stayed closed throughout the various lockdowns with no online presence, such was its confidence in the knowledge that consumers will flock back on reopening.

This confidence has paid off with stores setting new sales records and the company also managing to turn a profit despite COVID restrictions.

Amazon introduces a new breed of department store

In addition, Amazon—seen by many as the biggest threat to physical retail—has opened a department store in Westfield London which showcases popular items on its website.

Until recently, many would have considered this inconceivable; however this is a sign of its aim to become a 'Digital Bricks' brand.

Is physical retail the answer for growing e-commerce costs?

There is now a view that the growing cost (and reducing returns) of online advertising could lead to a revival in bricks-and-mortar retail. Couple this with the growing cost of achieving same day or next day delivery and the physical retail model suddenly looks a more attractive proposition for e-retailers.

Will the positivity last?

For all the positivity, we are by no means out of the woods. No sooner were retailers beginning to think a corner had been turned than we were hit by bare shelves, supply chain issues and workforce shortages.

In addition, the end of furlough and creeping inflation could hit spend in the coming months.

However, regardless of the convenience online retail provides, the fact remains that people are still willing to visit physical stores and this is one habit that will prove difficult to change.

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