The Impact of COVID-19 on Modern Retailers

There is no doubt that the coronavirus pandemic has changed the landscape of the retail sector. Social distancing regulations and civil anxiety surrounding the virus mean that physical stores do not offer the same browsing experience as we would usually expect. Meanwhile, a growing reliance on online shopping has been boosted by instructions to remain at home as much as possible.

The impact of COVID-19 and our new shopping behaviours have a profound effect on retailers. Changed buying experiences, falling and rising sales, and new consumer demands have defined an adverse year in retail. Here, we look at how customers and businesses have been affected by these changes.

Rising and falling sales

The Office for National Statistics points to eight key industries within the retail sector to define its overall performance since the start of the pandemic. Only two industries managed to increase their sales in the immediate months following lockdown. Unsurprisingly, these were food stores and non-store retailing (otherwise known as businesses which do not utilise a traditional brick-and-mortar location). All other industries within the retail sector saw their figures drop the most in April.

While most industries have since recovered and now show high sales figures when compared to February, two still fall behind their historic performance. Clothing and fuel saw sales drop by 67.6% and 60.7% respectively. This is significantly lower than the 22.2% drop the entire retail sector experienced. The latest figures indicate that the pandemic's impact is still damaging. In October, clothing was still 13.8% below February sales. Fuel was still 8.8% down.

The reasons for these fallings are a consequence of reduced demand. Limited social activities reduced the need for new clothing. Working from home, furlough, and further travel restrictions also reduced the need for fuel.

However, there are some promising industries within the sector. Household goods now achieve sales 14.4% above what they achieved in February, despite falling 50.5% in April. In fact, this recovery is seen across the board. Total retail in October achieved 6.7% more sales than it did in February. This indicates that the sector should remain optimistic for a stimulating recovery and boost when restrictions are eased, and normal consumer behaviour resumes.
An online boost

During the initial national lockdown, non-essential stores closed to prioritise the public health crisis. Unsurprisingly, consumers became more reliant on online shopping services as reflected in the rise of none-store retailing sales. But the lockdown changed more than the shopping experience, the limitations on public activities changed the demand for some products and services. For example, where social activities were limited, exercise was encouraged. In-store clothing retailers felt the force of lockdown, but for online sport sales companies, sales saw a significant boost. Cycling saw an increased popularity during lockdown, with many searching for more isolated ways to exercise and commute to work. For example, Google searches for 'mountain bikes' increased by 522% between February and April in 2020.

One bike sales company, Leisure Lakes Bikes, shared how their online activity grew during the pandemic. Demand for bicycles increased. In fact, visits to their website increased by 295% between March and April only one month. By May, visits to their website had increased by 580% compared to March. The appeal of cycling during the lockdown was strong.

Time on their website also increased. Between March and April, the average time spent on the website increased by 57%. This shows that consumers are spending longer online, researching products and showing a real intention of making a purchase. One consumer survey found that 55% of customers prefer to visit stores before buying online. COVID-19 is directly responsible for changing this consumer behaviour.

This example reflects changing customer demands and the impact of selling online. Recognising the retail landscape, offering a product which consumers need, and offering an unchallenging buying experience will allow modern retailers to benefit during this period of uncertainty.
Prioritising responsibility

The retail sector is adapting to the changing views of consumers. Customers look towards stores to provide a safe and COVID-secure environment through hand sanitation stations, social distancing recommendations, and PPE equipment and cleanliness among staff. However, the coronavirus pandemic has not just pointed towards an improved health awareness in businesses. Other aspects, including the environment and social contributions, are a focus of consumer choices.

The pandemic has created a sense of 'mindful retail'. One consumer index suggests that during the pandemic, 55% of people are shopping in local stores in their community or are buying more locally sourced products.

In the same manner, 61% of consumers say they are making more environmentally friendly or sustainable choices when shopping. Even more, 89%, of these people intend to continue this habit when the crisis ends. This means that a majority of people intend to prioritise sustainability in the future through their shopping choices.

Retail businesses have responded to these changing behaviours, promising to 'build back better' in the future. While the pandemic may have impacted the affectability of sustainable strategies, there is a clear drive to improve the retail sector in the future in this respect. One study of the largest businesses in the retail sector shows this intention. Retail giants, including Dunelm, B&Q, and IKEA lead among companies which mention sustainability most through their social media and professional platforms. Measures may include recycling, limiting waste, and utilising renewable energy.

The retail sector has been irreversibly impacted by the coronavirus pandemic. Whether looking towards consumer behaviour, e-commerce rises, or company culture, retail businesses must reflect on their potential recovery in the future and understand how they can improve on their services going forward. As the pandemic recovery continues, businesses must adapt to the constantly changing landscape of retail.
Sources

https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/october2020

https://trends.google.com/trends/explore?geo=GB&q=mountain%20bikes

https://www.leisurelakesbikes.com/mountain-bike/bikes

https://www.leisurelakesbikes.com/

https://www.retaildive.com/news/why-many-shoppers-go-to-stores-before-buying-online/441112/

https://www.accenture.com/gb-en/insights/retail/coronavirus-consumer-habits

https://www.reconomy.com/sustainable-giants/