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UPDATED Coronavirus round-up: Next, John Lewis, Aldi, Pret a Manger, Homebase, Metapack, KPMG/IPSOS, McKinsey, Mintel

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Next: coronavirus impact "worse that stress test predicted"
Next: coronavirus impact "worse that stress test predicted"
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Round-up of the coronavirus impact on retail for 29-04-20

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 when, as of 9am on April 27, 161,145 people have tested positive for coronavirus and 21,678 people have died of it in hospital. Over the previous day, 3996 people tested positive and 586 people died.

 

NEXT SEES MORE RAPID DROP IN SALES – AND PLANS TO RE-OPEN OUT OF TOWN STORES FIRST

Fashion retailer Next has seen a store sales down 52% and online down by 32% in the 13 weeks to April 25 – a fall off in sales faster and steeper than it had predicted in its stress testing at the start or the coronavirus crisis.

 

The retailers says it has increased its cash resources through asset sales, and by suspending share buybacks and dividend payments. It has also taken further steps to secure its debt finances by agreeing with its banks to waive financial covenants in its Revolving Credit Facility (RCF) for the coming year. It has also secured additional borrowing facilities through the government’s Covid Corporate Financing Facility (CCFF).

 

Next said it now believed its finances are as secure as when it announced in March, if not more so. However, it warned that much will depend on its ability to continue increasing the capacity of its online operations within the constraints of new safe working practices and on the timing of store re-openings.

 

Next also announced that it now has plans in place to reopen stores when lockdown is lifted, but would be prioritising out-of-town outlets initially where it is easier to operate in a “socially distanced world”.

 

JOHN LEWIS SET TO REOPEN – BUT SOME STORES WILL BE SHUT FOR GOOD

According to reports in The Evening Standard, John Lewis believes that it is “highly unlikely” that all 50 of its currently closed stores will reopen – with some set to be permanently closed. The retailer has also announced plans to cease trading altogether in Ireland.

 

14,000 of the company’s staff have already been furloughed and, while already struggling before the pandemic, it is looking at how to move forward as it looks to a post-corona trading environment.

READ THE FULL STORY HERE

 

ALDI INTRODUCES VOUCHERS SO VOLUNTEERS CAN PAY

Aldi has introduced an online voucher system to allow volunteers and carers to pay for shopping they are doing for vulnerable, self-isolating and people who can’t get to the shops themselves.

 

Available on the new Aldivoucher website, once purchased, the vouchers can be posted to any address in the UK so they can be given to volunteers, friends or family members to shop on their behalf. Vouchers are available in denominations of £5 .00 and £10 .00 with no additional cost to the customer for postage.

 

Fritz Walleczek, Managing Director for Corporate Responsibility at Aldi says: "This is an incredibly difficult time for certain people in our communities and, as has always been our mission, we want to ensure everyone has safe, easy and affordable access to quality food. We all owe huge thanks to the volunteers, friends and family members that are making sure vulnerable people across the UK can get groceries while they self-isolate. I’m hopeful that our voucher scheme will make it a little bit easier for them to continue this vital work.”

 

PRET A MANAGER GOES LIVE ON UBER EATS

Aiming to serve hospital workers, Pret a Manger has made some of its range available to order on Uber Eats across 10 key locations, following the re-opening of a small number of shops.

 

The chosen locations have re-opened for takeaway and delivery only and are near to hospitals in response to requests from a number of local NHS staff. Delivery is available via Uber Eats so customers can enjoy Pret’s food without leaving their home.

 

All Pret shops are adhering to strict safety measures and deliveries will be contact-free as standard to keep customers, couriers and employees safe. Uber Eats has also distributed hand sanitizer and masks to couriers in the UK.

 

Pret is offering a limited menu of some of the most popular sandwiches, salads and baguettes, as well as hot and cold drinks, baked goods, fruit and snacks. In addition, they are selling a selection of essential items such as milk, butter, and tea to help customers stock their pantries, all available via Uber Eats.

 

Toussaint Wattinne, General Manager of Uber Eats in the UK, says: “I am delighted to be partnering with Pret, one of the nation’s favourite chains as they start re-opening their stores.”

 

HOMEBASE TO REOPEN STORES

Following hot on the heels of last weekend’s opening of B&Q stores, fellow DIY retailer Homebase is planning to open some of its footprint this weekend. In a message to customers, CEO Damian McGloughlin said that following a successful trial across 20 stores, “we will be fully reopening an additional 50 stores across the UK on Wednesday 29th April, with strict controls in place to ensure shopping is safe for everyone. Our remaining UK stores will all be reopened for customers to browse and shop from Saturday 2nd May”.

 

Homebase closed down all its stores and moved to online trading only at the end of March – despite DIY stores being deemed essential by the government. The move was made to ensure safety of staff and shoppers. The retailer now says it has “taken this time to carefully review and make a large number of changes to our operations in preparation for a safe, phased reopening, in line with Government guidance on social distancing”.

 

METAPACK SHIP-FROM-STORE TECH TURNS CLOSED STORES INTO DISTRIBUTION HUBS

With stores closed and a surge in ecommerce orders, ecommerce delivery company Metapack has used its technology to turn 10 retailers into online stores and leveraged their stores as mini-distribution hubs.

 

Metapack’s own data shows that online spending has reached Black Friday and holiday peak levels, with certain retail verticals experiencing a huge 101% year-on-year increase in shipping volumes. Alongside this, new research from ACI shows that transaction volumes saw a 74% year-on-year increase in March.

 

For some retailers, eCommerce is their sole channel to generate revenue during lockdown. However, in order to protect employees and abide by social distancing guidelines, the risk of warehouse closure is a concern. Additionally, inventory trapped in physical stores and rapidly losing value, is another major concern for retailers who need to recoup lost profits and avoid markdowns.

 

“The delivery volumes we are processing are unheard of for this time of year and retailers need to ensure they have the technology, agility and capability to adapt their operations and put their physical stores back to work,” says Bruce Fair, CRO at Metapack. “Metapack’s Ship-from-Store solution allows retailers to dust the cobwebs from their physical locations and use the local inventory to deliver goods to restless consumers and outlast the crisis.”

 

ONLINE GROCERY UP 33% – AND WILL STAY THERE, SAYS MINTEL

The latest research from Mintel, reveals a dramatic change in online shopping habits over the COVID-19 lockdown period, habits that Mintel believes could prove lasting.

 

Online grocery shopping is booming with the sector set to grow 33% in 2020 to reach an estimated value of £16.8 billion, up from £12.7 billion in 2019.

 

And it is a change that is here to stay, says Nick Carroll, Associate Director of Retail Research at Mintel. “Shopper numbers in the online grocery market have plateaued in recent years as retailers struggled to get new customers to try these services,” he says.

 

“The outbreak is bringing a new audience to online grocery, and this should boost the market long term with strong growth forecast through to 2024. While there is currently a significant disruption to the online grocery market, with some retailers not accepting new customers, this will ease in the short-term as more capacity is brought online.”

READ THE FULL STORY HERE

 

CONSUMER CONFIDENCE SET TO RETARD UK AND GLOBAL RETAIL GROWTH THROUGHOUT 2020 WARN KPMG/IPSOS, MCKINSEY AND GLOBAL DATA STUDIES

Consumer confidence is at an all-time low, with a global study of consumer views by McKinsey collected on April 18th-19th suggesting that just 17% of British consumers saying they believe the economy will rebound in the next 2-3 months.

 

McKinsey goes on to find that a quarter of consumers surveyed in the UK believe that COVID-19 will cause the economy to fall into a long-lasting recession. As such, 36% of consumers say they are cutting back on spending with a further 36% saying uncertainty is preventing them from making purchases they would normally make.

 

This is leading to what the KPMG/IPSOS Retail Think Tank (RTT) sees as the ‘obliteration’ of any hope for a retail recovery in 2020. It sees its Retail Health Index (RHI) falling by 3 points to 71 in the first quarter of 2020, a new record low.

 

Globally, the picture is similar, with Global Data predicting that global retail spend to fall 3.0% in 2020, equating to $549.7 billion, in comparison to a previously expected rise of 5.0% prior to COVID-19 (+$927.7bn).

 

China, however, is bucking the trend. Here 56% of consumers in China expect the economy to rebound within 2-3 months.

READ THE FULL STORY HERE

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