InternetRetailing rounds up the latest news on Lockdown 3.0, as non-essential shops are told to close across the UK. Here we consider what the latest order to stay at home means for retailers, how that is affecting online grocers, and what financial help is available.
Shops close for Lockdown 3.0
Shops are closing once more across the UK as new lockdowns were announced in England, Wales and Scotland. Non-essential retailers will be closed in England as part of a lockdown that will see schools close until at least the end of February half-term – although on Tuesday cabinet minister Michael Gove warned this might extend into March. In Wales, the lockdown will run until at least January 18 and could continue until the end of the month, while in Scotland it will run until February. Northern Ireland is two weeks into a six-week lockdown in which non-essentail retail is already closed.
Non-essential shops close from midnight for a lockdown that is expected to run at least until the end of the February half-term – if the health service has been able to protect the most vulnerable through vaccination. That means stores are likely to close close for a minimum of seven weeks. Similar steps were announced today in Wales – until January 18 at the earliest – and Scotland while, at the time of writing, the Northern Ireland Executive is meeting to consider its response.
Non-essential shops have only been open since the beginning of December, following a lockdown in November, and then only in lower risk areas of England and Scotland. The latest lockdown takes place on the day that the UK reported 58,784 new coronavirus infections and 407 deaths.
Shoppers are likely to respond to this latest lockdown by turning online to buy once more. Those who have been asked to shield likely to rely once more on ecommerce grocery deliveries. As in November, shops in England will be able to fulfil click-and-collect orders for collection off their premises as well as for home delivery.
Helen Dickinson, chief executive of the British Retail Consortium, responded to the announcement with a call for more financial support in order to avert job losses.
“The continued rise in Covid cases over the Christmas period is a significant cause for concern, and we understand the need for the government to act,” she says. “Retailers have been playing their part to make stores safe, spending hundreds of millions of pounds on coronavirus safety measures, including implementing social distancing measures and increased cleaning procedures.
“The government’s testing programme and a rapid roll-out of vaccines are the key to bringing an end to this cycle of lockdowns, and we have made clear to government that the retail industry is willing to make its resources available to support this effort.
“The consequences of these latest restrictions – with non-essential retail already closed for several weeks – will be severe for many businesses who yet again face losing £2bn per week in sales. Already, 178,000 retail jobs have been lost in 2020, and with over 250,000 retail staff currently on furlough, that number could increase dramatically in the new year.
“Retailers want to trade their way to recovery but if they are forced to close then further financial support will be needed or many businesses will go bust and thousands of viable jobs will be lost. The biggest difference the government can make is to extend business rates relief from April for those hardest hit by repeated lockdowns.”
Repeated lockdowns over the last 10 months have accelerated the shift online in the UK. Shoppers who have bought online during lockdown have found the habit sticks. Now they must buy online once more.
Shoppers turn online – with mixed results
Customers are reported to have rushed to book online food deliveries as the new lockdown began, putting strain on grocery ecommerce systems – despite supermarkets having hugely expanded their online capacity over the last 10 months since Covid-19 was declared a pandemic.
Julian Skelly, retail lead and retail analyst at digital consultancy Publicis Sapient, says: “Supermarkets are back in the spotlight again. Within minutes of the PM’s announcement last night, online shoppers were experiencing problems: long queues, websites down and frustrated posts on social media. It feels like we are back in March 2020 again. Hopefully this time around, the panic buying behaviour will subside quickly and we can get back into a routine. However, supermarkets need to be doing all they can to assure shoppers that stock levels are secure and their online processes are robust. This time around, they need to show they are prepared for the surge.
“As we face another long period of restrictions, it is absolutely time for supermarkets to double-down on digital, if they have not already. With shielding and safety concerns once again prevalent, online shoppers don’t simply want more slots, they need them, alongside smoother processes and greater fulfilment options. We’ve seen home delivery becoming more stable and predictable but better click and collect offerings will allow supermarkets to scale. Lockdown 3.0 could be supermarkets’ opportunity to lock in on new buying behaviours, which they can capitalise on afterwards. As more shoppers move online, supermarkets can start to reduce their reliance on costly store real-estate. But only if shoppers prefer the alterative.”
Andrew Fowkes, global retail practice at SAS, says: “The pandemic is accelerating digital shopping trends which were already taking place within the industry. Supermarkets must now fully pivot to digital and boost website responsiveness if they are to meet customers’ urgent needs. New research from SAS suggests a third of customers would now ditch companies after just one bad experience as they increasingly look for personalised experiences, seamless payments and fast service.
“A huge surge in first-time digital customers has created a new playing field for online grocers. Those who can understand what these customers need, and how to meet these expectations during such volatile times, will navigate these constant changes successfully. Operational agility is mission critical at a time like this, so it is fundamental that analytical models reflect the significant and fluctuating changes in demand for certain goods.”
Richard Mort, director at website testing specialist Edge Testing Solutions, says: “With Brexit, the more virulent strain of coronavirus and now a national lockdown, consumers will switch again to more online shopping. Retailers simply cannot afford to have a slow or unresponsive website – especially as customers are demanding immediate response times and the majority are happy to move on to a competitors’ website if kept waiting.
“In our recent analysis, the ability of several supermarket websites to cope with a surge in traffic over Christmas had already been called into question following testing of their speed, ease of navigation and security. Our analysis found all but four of the major online grocery sites had below average scores on a range of metrics regarding their ability to hold up to increased user numbers.
“During a time where consumers are shifting to online shopping more than ever before, our research revealed that supermarkets still have room for improvement, with slow speed, poor image quality and broken links threatening user experience. Many of the poorer performers cannot afford to let a poor performing website impact forthcoming sales.“
Financial help for retailers
The government today unveiled new £4.6bn funding for new grants to help retailers survive the latest lockdown. Chancellor Rishi Sunak offered retailers, leisure and hospitality businesses a £9,000 grant per property to help them survive until the spring. Retailers will also be able to use existing furlough schemes until the end of April, if needed.
Sunak says: “The new strain of the virus presents us all with a huge challenge – and whilst the vaccine is being rolled out, we have needed to tighten restrictions further. Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring.
“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”
But accountants say those in the sector that do not own or rent a property are excluded from the support.
Richard Churchill, a business advisory partner at tax and advisory firm Blick Rothenberg, says: “While the up to £9,000 per property to provide additional support to those hardest hit businesses in retail, hospitality and leisure is welcome to address the latest lockdown, it excludes many businesses and individuals in these sectors who do not have a physical property.”
Richard added: “In recent years many businesses have utilised the increased flexibility that serviced office spaces provide and many people work from home, but they are still very much part of these heavily impacted sectors and provide a variety of services to events and projects that are delivered around the country.
“ They provide support services to venues that can claim the allowance, but they cannot. Grants should be available to all businesses in these sectors and should not be linked to having a physical property.”