- Don-Alvin Adegeest |
It has been just over six months since the start of global lockdowns. A battered and bruised retail industry has been slow to recalibrate and recover from the grip of Covid-19.
Even after physical retailers reopened this past June in the UK, others in the US are only just now returning to pre-pandemic business hours. Many global heavyweights, like Neiman Marcus, Century 21, J.C. Penney, Olivery Sweeney, Monsoon, Victoria’s Secret, The Real Real, Zara, H&M – the list goes on - turned out to not have enough armour and cash in coffers to fight the pandemic, citing bankruptcies, store closures, layoffs and reducing profit forecasts, while others shuttered their doors for good.
Online sales are soaring
Official statistics from the ONS in the UK and US Census show ecommerce activity in both countries soared, with an increase from 20 percent to over 30 percent in the UK and 17 percent to 22 percent in the US.
According to digital media strategist Benedict Evens, the lockdown fueled growth normally seen in a period of five years to just a few months. The “spike partly reflects a shift in the denominator: digital increased while sales at most physical retail declined, except for groceries. This effect was much stronger in the UK, where lockdown was much deeper. Even so, absolute US ecomerce sales rose 32 percent in Q2.”
The last few months of 2020 are not likely to see a full recovery or return to spending levels before the coronavirus shook the industry, even if ecommerce is booming and Christmas is around the corner.
2020 saw many brands post their worst financial quarter ever, while others saw incredible surges in online sales. As the New York Times wrote: “Prada’s online sales doubled. Bottega Veneta’s tripled. And Farfetch, the digital marketplace that allows upmarket vendors to sell their goods online, reported last month that it had seen a 60 percent surge in traffic for the second quarter compared with the same period last year — and 500,000 new customers.
In the UK, where a new “rule of six” was recently enforced, the latest data from Springboard show a marginal 2.4 percent increase in footfall across all retail destinations last week. The figures are in sharp contrast to 2019, when 28 percent more shoppers visited stores in the same week.
The Centre for Retail Research said nearly 125,000 retail jobs were lost in the first eight months of 2020, and almost 14,000 shops closed permanently. These numbers are likely to rise by the end of the year. Sales of fashion saw a 70 percent decline in April, which the last quarter of the year cannot recoup.
Recent reports of recovery show ecommerce is booming, but physical stores continue to suffer. PWC noted the “risks of further outbreaks, local lockdowns and rising unemployment are far from receding, and further seismic shifts may yet occur.”
Image via Benedict Evans
Photo by Porapak Apichodilok from Pexels