The effect of lockdown on the retail sector has been made very clear today, with ONS figures showing that GDP from the retail sector was hit by 8.9% in the three months to April. Until now, non-essential retailers have been ordered to stay shut, and the government has supported 1.7m retail jobs as a result, through HMRC.
But from Monday all that is set to change and the sector will be able to start opening shops again. In today’s InternetRetailing newsletter, we look at some of the ways Top500 retailers are responding to that challenge. Games Workshop and The Works both appear to have a relatively optimistic approach to business. Games Workshop says its sales are recovering faster than expected from what was at one point a total shutdown of the business. The Works, meanwhile, saw online sales rise strongly during lockdown, although it will only be able to test customers’ appetite to return to shops once they start to reopen net week.
When those shops do reopen on Monday, it’s likely that most, if not all, retailers will have had to change the way they sell, with new requirements for social distancing and hygiene measures now in place. Some have gone still further by introducing new services that aim to reassure those who are as yet less enthusiastic about returning to stores. At Mamas & Papas, virtual personal shopping sessions were already being planned pre-Covid-19, but these have become still more relevant at a time when pregnant women remain in a more vulnerable category.
Meanwhile, HMV is introducing relatively low-tech approaches to in-store shopping alongside existing click and collect services. Shoppers can drop off their shopping list, or ring up to reserve items that they later collect from the store. These can perhaps be seen as baby steps towards going back into stores. Confidence will return once shoppers venture out to see for themselves. In the meantime, retailers that support customers, as they do take those first important steps out of a lockdown that has knocked confidence as well as sales, are likely to benefit long-term.
The next challenge will be to think about how a no-deal Brexit might affect retail businesses following cabinet minister Michael Gove’s apparent formal confirmation this lunchtime that the UK will not extend the transition period.
I just chaired a constructive EU Joint Committee meeting with @MarosSefcovic— Michael Gove (@michaelgove) June 12, 2020
I formally confirmed the UK will not extend the transition period & the moment for extension has now passed. On 1 January 2021 we will take back control and regain our political & economic independence pic.twitter.com/nZjNpez8LI
Talks begin on Monday that may help clarify whether the UK is likely to leave with a deal - or not. We’ll hope for an update when we return to the subject in the next InternetRetailing newsletter on Tuesday.