The onset of the coronavirus crisis in the early months of 2020 has had a huge impact on businesses worldwide and the dynamics of the retail landscape have been altered in a variety of important and potentially lasting ways.
Shift towards online shopping
For reasons that are easy enough to fathom, the Covid-19 crisis has catalysed the trend towards online shopping. The share of retail sales accounted for by digital transactions has been growing notably for some years but 2020 and the pandemic accelerated that trend in a massive way.
In the UK, Covid-induced lockdowns left many thousands of stores closed for long stretches and starved of footfall even when they were allowed to open to customers shopping in person. Meanwhile, online sales have increased significantly, which has been good for businesses already setup to facilitate digital shopping but extremely challenging for those that are not online or who struggle to compete consistently in those contexts.
Festive winners and losers
The festive period is always a crucial one for so many retailers, both online and in stores, but lockdowns meant that many non-essential retailers were left fighting to make what sales they could online while their outlets were left empty of customers for the most part.
However, it proved to be a different story for grocery retailers and particularly supermarkets, who in the UK were collectively able to chalk up a record £11.7 billion in grocery sales during the month of December 2020. Their online sales were up notably but millions of consumers also took their opportunities to buy food and drinks in person as they stocked up for a lowkey Christmas.
Strategic battles playing out
High street fashion retailers such as Primark have suffered heavily during the pandemic because their business model relies so much on in-store shopping. Online rivals like Boohoo, however, have fared rather better and have actively thrived during the crisis and the lockdown situation.
Online activity has taken on far greater prominence for those companies that primarily rely on their in-store sales but simply switching to an ecommerce operating model is not straightforward and often impossible for established operators.
Debenhams is one traditional retailer that looks set to soon disappear from the high street, with the department store chain having been sold to Boohoo in a deal worth £55 million in early 2021. Despite that sale, all Debenhams outlets are set to close, with Boohoo apparently only seeing value in the company’s online operations and its intellectual property.
Focussing on fulfilment
Another clear trend emerging in the retail sector almost a year into the pandemic is an ever clearer focus on improving fulfilment capabilities and delivery mechanisms. Relationships with delivery drivers have become an increasingly crucial part of the retail picture, which in turn puts a greater emphasis on warehouse processes and automation.
Looking to the future
If 2020 taught us anything it is that the future is impossible to predict in so many ways but the hope among retailers will clearly be that restrictions on in-store shopping will ease in countries worldwide sooner rather than later. Assuming that happens, retailers will no doubt be aiming to add value to their bricks and mortar offerings in order to show consumers just what they’ve been missing and to give people as many reasons as possible not to do all their shopping online even if they love the familiarity and convenience.
Allowing for optimism
There is no doubt the pandemic has been tough on most retailers but those that survive will need to look with optimism to the future and embrace innovation as they go and hopefully leave the Covid-19 crisis behind them while learning from it ways that could prove invaluable down the road.
Despite the shift to online shopping, smaller, local businesses continue to thrive and sales of these businesses during the pandemic have hit record numbers. Many business owners believe that selling their business during Covid-19 would be a bad time, but this has proved to be a misnomer which should be corrected. Similar to the residential markets that have seen some of the strongest sales in recent times, the business transfer market remains very buoyant with many more businesses being sold each week than those coming to the market.