How retail will recover this year
Looking at the data relating to Covid-19, there’s a real blend of positive and negative. Making for grim reading are the numbers of deaths and hospitalisations as a result of the pandemic. But, alongside that is the number of people who have received the vaccine (more than £10 million and counting).
This mix of highs and lows can also be seen in retail data. Figures from the British Retail Consortium reveal a drop of 0.3% in annual sales growth – a result of retailers having to shut their doors during each lockdown. But just as consumers were quick to start spending after November’s lockdown, the same is expected to happen once the current restrictions are lifted. A KPMG/Ipsos study suggests sales growth of up to 3% in 2021.
Shops may be shut again, but The Drum highlights why retailers should feel confident about recovery before the year is out.
Despite huge challenges in 2020, retail has shown remarkable resilience. Predictions for sales volumes during the second lockdown did not look promising. However, despite stores having to close, sales for November 2020 stayed 2.6% higher than February’s level in the year to November.
Retailers have overcome challenges by creating more flexibility – everything from new safety measures to new ways of trading – all at short notice. Click and collect, virtual shop floors and placing sales experts in call centres have given customers the convenience they expect and encouraged them to spend.
The more confident consumers are about the future, the more likely they are to part with their cash. But it’s hard to feel confident when faced with a pandemic and our mental – as well as physical – health has suffered as a result. Luckily, positives such as the furlough scheme and now the vaccine have helped boost consumer confidence.
According to a KPMG/Ipsos think tank, during the second half of 2021 consumers will have more savings and more confidence (once vaccinated). As a result, demand will rise as we emerge from the third lockdown. Of course, different categories will see different levels of performance, but the overall picture is looking positive.
Of the brands that have done well, omnichannel strategies have been key to their success. Dunelm and Dixons Carphone Warehouse are looking at impressive pre-tax profits thanks to a strong online presence and investment.
Demand for the physical retail experience shouldn’t be underestimated either. When shops have reopened, customers have hit the high streets. At the end of the second lockdown, footfall increased by 20% – and that was before anyone had been vaccinated. In truth, customers are missing the retail experience and are keen to rediscover it again.
Shopping with purpose is another trend to emerge from the pandemic. Consumers go out to buy, and don’t come home empty-handed. As customers return to physical stores, we can expect profits to rise – especially when it comes to large electronic items that consumers would rather buy in store.
It can be hard to stay positive when faced with such a huge crisis. But with consumer confidence rising, retailers can use key strategies to entice consumers back through their doors. The positive signs for retail are there – as long as you know where to look.
At The Delta Group, we help retail businesses find solutions to whatever challenges they face and give consumers what they want. Get in touch with the team today.