How has the Coronavirus Pandemic Affected the Retail Industry?
The retail sector has shown extraordinary resilience in the face of this year’s unique, unpredictable events. When COVID-19 first swept across the UK in March of 2020, it had a profound effect on every industry – from travel to hospitality – in a way that was completely unprecedented. The retail sector was no different, with the closure of many bricks-and-mortar stores. The way that the industry has been able to weather the storm is testament to the fact that the retail sector isn’t going anywhere any time soon.
In this post, we’ll be exploring how Coronavirus has affected the retail industry, and why despite these seemingly impossible obstacles, the sector has the potential to bounce back stronger than ever.
The Impact of Lockdown on Retail
Shop doors were forced to close when lockdown came into full effect in March. While they were allowed to open again in June and July, between 29% and 54% of stores (varying regionally) never did. Many high street shops, like TM Lewin and Oasis, were forced into administration.
However, while the high street has undoubtedly been hit hard, a shift of sorts indicates that it’s far from collapsing. Big corporates and department stores are increasingly being replaced by smaller, more agile independents and service-based businesses like cafes and restaurants.
Retail is also thriving in the online space. Data strongly supports the idea that digital sales soared during lockdown, increasing for the last four months up until August. It’s clear, then, that in pandemic times the importance of a strong digital platform can’t be overstressed. The brands who had a strong online offering before the pandemic, like ASOS (who have reported a profit increase of 300%), have been the ones to react and adapt most quickly, and are therefore the ones still standing. Smaller brands have been able to survive by building up e-commerce channels using platforms like Shopify or Amazon. The shift to a digital-first approach in retail has been evolving slowly, but the pandemic sped up a lot of changes which might have otherwise taken years to come into effect.
How will a second lockdown impact the industry?
There have been recent suggestions of a second lockdown in the UK to combat soaring infection rates. This lockdown could affect the retail sector significantly, especially if physical stores were closed over key dates like Halloween, Black Friday and even Christmas.
However, lessons have been learnt since the first lockdown, and with advance notice of a second one taking place the retail sector has time to take it seriously and prepare. Those who can be most reactive to these changes stand the best chance of lasting through the pandemic. It’s also hoped that a second lockdown wouldn’t be quite as severe as the first, and that retail stores might even be allowed to stay open for the duration, helping the high street further. This is thanks to the introduction of carefully thought-out COVID-safe environments which take into account mask-wearing and social distancing.
Still, online will remain the most crucial component of trading strategy should a second lockdown come into effect. Because figures for online shopping remained high even as bricks-and-mortar stores reopened, it’s clear that customers feel more comfortable shopping online and therefore a second lockdown would be unlikely to hit retailers quite so hard.
There are also other measures still in place from the first lockdown to help retailers, such as reduced rents and cuts in non-essential spends, which will help to act as a buffer. We’re also heading into retail’s peak trading period, so it’s hoped that increased online sales during these periods will help retailers deal with any tough months ahead.
CEO of the FRA, Lee Lucas, has emphasised the positive impact the first lockdown had on online sales, and the fact that a second lockdown could continue the trend: “Retailers successfully drove additional sales through their websites during lockdown,” he says. “Retailer Next, for example, announced on Thursday that even since stores reopened, its online sales are stronger than they were pre-pandemic.”
The Future is Bright
The retail sector has a chance to thrive in the months and years to come, as proved by the transformation of the high street and the amount of retailers who have adopted a digital-first mindset. Lee Lucas has also stressed that the strength of online sales will carry retailers through a second lockdown, if it comes: “Consumers’ growing enthusiasm for online shopping will therefore provide added insulation in the event of a second lockdown.” He’s keen to address, however, that physical stores will continue to suffer: “With in-store clothing sales remaining 15% lower than they were pre-pandemic across the industry, there are fears another lockdown could set back a recovery that still had some way to run.”
It’s clear then, that retailers need to place their focus on making their online offering as strong as possible. The retailers who have learned lessons since March and set up an omni-channel experience will be the ones to perform best should a second lockdown happen, taking issues with stock and supply chain in their stride. It’s the businesses less willing to adapt who will fare less well in the months ahead. The online landscape does bring its own challenges, such as the issue of returns, and how to reduce these as much as possible. Fashion players will need to invest wisely in innovative technology to allow them to provide a superior online shopping experience and essentially out-perform their competitors.
The key takeaway here is that the retail sector is robust and agile, and can adapt if things change again. We’ve all learned valuable lessons from the first lockdown, and it’s clear that digital awareness and skills are more important now than ever before.
Here at the FRA, we work to future-proof our fashion retail graduates by teaching digital skills to serve them well in the current landscape. We’ve worked hard to ensure our campus is COVID-secure and to make our online offering valuable to our students. Click to find out more about our courses and our coronavirus policies.