In today’s InternetRetailing newsletter, we’re reporting as retailers from Morrisons to Games Workshop, Dixons Carphone and Dunelm show both how online helped them to face the Covid-19 lockdown, and how some have gone on to expand their online capacity since then.
Those that could offer convenient and reliable ecommerce and multichannel services have been well placed in recent months, and online sales are still growing faster than they have in years. However, August figures from the IMRG suggest that online sales growth may now be starting to moderate as people start to go back to face-to-face workplaces and social situations. The big questions now are about how shoppers will buy in future: will they still buy more online than they did before Covid-19? Just how big will Black Friday and peak trading be online this year? And will they still be able to afford to buy, given the Covid-induced recession and the likelihood of more redundancies once government support comes to an end?
To an extent, and as long as shoppers have money to spend, it seems that online will have to be bigger than it was since so many shops have closed during the year – and more closures are expected. The latest Centre for Retail Research figures suggest that more than 235,000 jobs are expected to be lost this year, stemming partly from the closure of more than 20,000 shops. Well over half of those have already gone. All of this reduces the capacity of the UK retail industry to serve customers. Not only are there fewer staff but there is less space to house stock, while some customers must travel further to visit a store. Morrisons is among the supermarkets that have invested quickly to hire more people to serve the new expanded online channel, among other areas. But the move has hit profits as a result. Dixons Carphone this week also hinted that its online sales lockdown boom will have been less profitable for it than selling via its stores. To the ongoing challenges in retail, we may soon add the challenges of a no deal final exit from the EU transition period that is now looking more likely than ever, despite the Japan trade deal agreed in principle today. Japan accounts for 2% of UK exports. There are now 111 days left in the transition period to sign deals covering the remaining 98% of exports.
The Centre for Retail Research, addressing the number of jobs and stores lost, suggests that retailers have not acted strongly enough to make the most of their stores and meet the challenges of ’new retailing’. We’d contend that multichannel retailing remains a good answer for how today’s retailers should sell. More needs to be invested in bringing stores and online together, providing services that are truly useful for shoppers who, after all, are unlikely ever to be confined to their home and prevented from going to shops to the extent that they were during the Covid-19 lockdown. Some landlords are now reconsidering rents in relation to turnover, and that seems to be the start of a useful pattern. Online has shown its value during lockdown and it’s likely that more sales will still take place over the internet in the future – but we expect that shops will remain a fixture well into the future.
In today’s guest comment Vikram Murthi of Llamasoft suggests that retail winners are embracing AI-enabled supply chains.