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UPDATED Coronavirus round-up Next, Dunelm should expect lower sales, Burger King looks to apps to drive distanced dining, shop rents fall 90% and vinyl records sell well online

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Hats and apps: one way to help ease lockdown (Image: Burger King)
Hats and apps: one way to help ease lockdown (Image: Burger King)
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Latest updates on how the retail industry is dealing with the unfolding coronavirus pandemic – 24 June 2020

We’re reporting on the effect of the Covid-19 coronavirus pandemic on the way UK shoppers buy – and on how retailers are responding to that changing behaviour. This update comes as, as of June 24, 306, 210 people have tested positive for coronavirus and 42, 927 people have died following a positive Covid-19 test result. Over the previous day, 874 people were reported to have tested positive and 171 people were reported to have died following a positive test.

 

Next and Dunelm ‘underestimating fall in demand’, banks warn

Low household income and general wariness around the future is going to hit retailers harder than they think, with Next and Dunelm singled out by analysts as being the most over-confident.

 

Analysts at Citi Bank warn that any rebound in sales will be lower than many think and have downgraded Next and Dunelm shares to ‘sell’.

 

In a note on Wednesday, Citi’s analysts said many retailers were basing their rebound predictions on store reopening and potential cuts to VAT. These short term measures would not be enough to counter cautious household spending plans.

 

UK household spending is seen by many analysts as the best indicator for consumer spending – and it so far indicates a consumer recovery will take until at least until the end of 2022, Citi says., This contrasts with apparent current market expectations of a V-shaped recovery in 2021.

 

Burger King turns to apps and giant hats to bring back in-restaurant dining

Burger King is testing an app that is thought to allow socially distant, in-restaurant dining as it turns to mobile to help it out of lockdown.

 

The app will make it easier to order and collect food in the restaurant. To keep customers apart, the chain has launched a giant two metre wide version of its trademark cardboard crowns.

 

Burger King is one of a number of Quick Service Restaurants (QSRs) looking at how to use apps to incentivise consumers to continue to social-distance themselves.

 

With the average consumer spending 20% more time each day on mobile in April 2020 compared to 2019, mobile is more important than ever in capturing consumer’s attention and maintaining brand loyalty.

 

According to App Annie, the top QSR apps by downloads in the UK are Domino’s Pizza UK at number one, followed by KFC UK, McDonald’s UK, PizzaHut UK and Papa John’s Pizza GB.

 

Retail rent day arrives and landlords are suffering

Many retailers have suspended paying their leases and rents on stores over the lockdown, but three months after everything shut, landlords are looking at what returns they will get this month – and it could be as low as just 10%, the industry warns.

 

According to reports on AOL, sector analysts have said they expect it to be a “grim day” for landlords, with a number of major chains halting rent payments due to the coronavirus lockdown, with around 90% of due rents not being paid.

 

Ramzi Kattan, vice-president at Moody’s, said retail landlords will be “particularly hard hit” by reduced payments, with non-essential retailers only reopening in England last week.

 

Already JD Sports has said that its restructuring of Go Outdoors is contingent on securing lower rents and leases.

 

According to reports on the BBC, now is the time to look at revenue based rents, so struggling retailers can have time to get back on their feet.

 

Vinyl record buyers pushed online generate £1m in sales

With Record Store Day – the day that celebrates the network of independent record stores across the UK – pushed back to later in year, an online version has seen vinyl fly off the virtual shelves.

 

On Saturday 20 June, Love Record Store Day saw music lovers buy up more than £1 million worth of new and old records via online stores, with special releases by Oasis, Radiohead, The Libertines and more making it a success.

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