Stores may be reopening today but this be a short-lived boost and retailers will still lose £37bn this year, says GlobalData, a leading data and analytics company.
Sofie Willmott, Lead Analyst at GlobalData, comments: “44.8% of UK consumers have spent more online as a result of the outbreak* and as a result of changing shopping habits we forecast online non-food expenditure will rise 14.3% this year (versus a pre-COVID forecast of +6.5%). However, the increase in online spending will not be able to prop up the total market as physical stores still account for the vast majority of sales.”
As stores re-open today we expect to see shoppers queuing to enter, as retailers implement strict safety measures, keen to browse and purchase while seeking a new source of entertainment after months of being at home. But it will take time for footfall to return to normal as many will remain cautious and choose not to visit shopping locations due to health concerns or money worries with job security and personal finances remaining a burden for many.
Willmott continues: “Clothing is the product area that most visitors are looking forward to shopping for as they start to anticipate a return to social activities and buy into new season trends*. However, we expect clothing & footwear to be the worst hit sectors this year with spend predicted to fall over 30% as shoppers are unlikely to buy more to make up for their lack of purchases across March, April and May.”
A number of clothing & footwear players have already fallen victim to the pandemic with Monsoon Accessorize tumbling into administration last week before being bought by its founder. Others such as Oasis, Warehouse and Laura Ashley have also been rescued but their stores left out of deals leaving even more empty units on high streets which landlords will struggle to fill.
Willmott concludes: “The queues we will see on high streets today may look promising for retailers and although they will at least be able to trade from their store locations now, footfall and spending will take a long time to return to pre-COVID levels. We are set to see more store closures throughout the remainder of 2020 and unfortunately many more retail casualties as business struggle to offset their higher costs driven by essential safety measures, against lower sales.”
*Data taken from GlobalData’s surveys of 2,000 nationally representative UK consumers conducted in early May and early June 2020.