Many had hoped that the Chancellor’s mini-budget would offer some help to the retail sector: a VAT cut was mooted, some form of financial support to see many through until people come back to physical stores was hoped for. Neither materialised.
Instead, the magic money tree was only shaken at the tourism and hospitality sector. Retail, for now, has to go it alone.
To be fair, the hospitality and tourism sectors are perhaps ever worse off than retail: at least some retailers can claw back some revenue online – pubs, restaurants and particularly hotels and attractions can’t.
The boost to these hard hit sectors may have an upside for physical retailers, as the £10 off a meal at a restaurant could yet bring people back to the High Street. Any help that opens up tourism may also have a knock-on effect.
However, given that study after study shows that many shoppers will be steering clear of the High Street for the foreseeable future makes this seem somewhat unlikely to have any real material impact.
Coronavirus certainly hastened a consumer move online, perhaps yesterday’s budget statement seals that particular deal. Essentially, choosing not to support physical retailers in any direct way, but instead targeting money at apprenticeships, jobs for young people and un-furloughing those that are going to be employed until at least January, is Rishi Sunak saying “it’s ecommerce time” to the industry?
And, on this, he may be right. Consumers have shifted online and many aren’t coming back. June’s online retail sales spiked to a new 12-year high, up 33.9%. Mobile app use is up 40%, brands such as Levi’s have seen ecommerce grow by 35% this quarter and Amazon and Tesco are booming online.
Shopper habits and mores have also changed. They are converting online more, but they spending less, they are seeking better value for their money and they are making their purchase decisions based on sustainability and ethics of the companies they deal with.
This is driving growth across ecommerce. There is a growing demand for delivery drivers and there will soon be a demand to re-skill retail workers in the arts of online operations to meet this changed shopping model. The plan to put money into training and retaining the kind of people that do these jobs clearly marks out where the government sees the industry going.
Meeting these new demands is going to be hard for all retailers, no matter how far along their digital transformation path they find themselves. The government backing training, apprenticeships and helping young people find work, while probably not designed with retail specifically in mind, may actually prove to be something that does help the retail industry in the longer run.
Green jobs and tech jobs are getting the backing of the state. The old world order isn’t. We are seeing a shift towards 21st Century work models – albeit two decades late – which will be painful as we transition, but ultimately may prove to be the making of the industry.