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UPDATED From panic buying to lower footfall expectations – how Covid 19 is affecting online and multichannel retailers

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Coronavirus update: how Covid 19 is affecting online and multichannel retailers

We’re rounding up the latest on the coronavirus as we look to understand how the response to the disease is affecting the way shoppers buy – and how retailers can respond to that. This update comes as the latest Government coronavirus figures, updated at 2pm every day, show 319 people have been confirmed positive for coronavirus in the UK. Five people have died.

 

French Connection on how it’s approaching the virus

French Connection says that while the impact of the Covid-19 coronavirus is as yet unknown, all office staff can work from home if they need to. The fashion retailer and brand is reviewing the likely impact on its supply chains for winter season products coming from the Far East but chief financial officer Lee Williams says, in today’s full-year results statement, they “do not know for sure just yet how this will play out.” He added: “A major concern is that the outbreak leads to further reductions in footfall on the high street, though with our reduced exposure to pure retail we are less exposed than others. We will continue to monitor the situation closely.” The comments reflect the fact that the retailer now sells more clothes through wholesale partners than directly via its own shops.

 

DFS sets out how coronavirus has affected its business

DFS today explained in half-year results how the Covid-19 coronavirus had affected its business so far - and how it might in the future. The retailer, ranked Top500 in RXUK Top500 research, said production lead times are two or three weeks later than normal since the four Chinese factories that supply it with finished goods did not start work straight away after the Chinese New Year due to the outbreak of illness there. However production is now increasing and suppliers should be able to catch up with the output deficit once they are at full capacity. If that does not happen before the end of the financial year, sales and profits will be deferred to the following year. DFS receives sofas worth £10m a year from China.

 

The balance of its sofas come from suppliers in continental Europe, the UK, and from its own UK workshops. Its own operations and those of its European suppliers have enough raw materials for “a number of months”. Two of its smaller suppliers are based in the south of Italy and at the time of publication those operations had not yet been affected.

 

If production lead times get back to normal soon DFS says it is “prudent” to assume there will be around £1m in extra delivery costs. But if the virus spreads further across markets, and fewer customers come to its shops, then, says DFS, there would be an impact on its financial performance. So far, it has seen lower customer footfall only in recent days, and it says that if there was a “severe bookings reduction” over a sustained period, it would be financially well placed. But it has taken the steps of deferring some capital expenditure and making its marketing spend more flexible. “We believe any impact should be most likely transitory in nature with the large majority of customer purchases being deferred into the future rather than not being made at all,” said DFS in its half-year statement. It says that while DFS brand sales fell in the hot spring and summer of 2018, strong demand returned when the weather cooled and overall full-year sale were up by 2.6% that year.

 

As online business increases, delivery companies must ensure customers feel safe

 

Predicted fast growth in home deliveries as shoppers move to counteract coronavirus is already starting, says ParcelHero, which suggests that retailers must now work with delivery partners to change protocols around home deliveries.

 

David Jinks, head of consumer research at ParcelHero, says: "The move from shopping in store to home deliveries makes strong sense. But home shoppers need to know they are not at unnecessary risk while their shopping is being delivered; and drivers need to feel they are not being placed in harm’s way, especially if they are delivering to households in self isolation. That means the traditional way retailers and couriers deliver items has to change. With companies like Waitrose confirming they are happy to deliver to houses in self isolation, shoppers and drivers need to be confident any risk is minimised during the delivery process.

 

"Everyone needs to know what the procedures are to minimise the risk of transmission. Personal contact and, in particular, the use of handheld electronic signature pads are potential flashpoints. The problem is that the majority of retail and courier deliveries require confirmation an order has been delivered, for the peace of mind of both the buyer and the seller. Currently some retailers and parcel services are suspending the need for a signature, provided that the customer has contacted the retailer and notified them they are self-isolating. But this has not been widely publicised and is clearly not ideal in the longer term. It should be made possible for the receiver to sign online when the items are delivered, as is widely practiced in some EU countries.

‘Having drivers come into peoples’ homes is another point where the virus may be transmitted. So clearly traditional practices have to change and both shoppers and drivers need to see consistency in this.

 

"Waitrose has told its customers: “If you are self-isolating, we will be happy to deliver to you but please contact Customer Care once you have booked your slot to discuss specific arrangements, including where we can leave your shopping” That last point, “where we can leave your shopping” is key. Many shoppers probably have alternative delivery points registered with couriers, for if they are not going to be in, such as a porch, shed or garage. Such areas might need to be shared to all retailers and drivers as potential drop off points for both food and parcel deliveries, to minimise any need for contact.

 

’Similarly, people needing to send a parcel will probably feel more comfortable having their package picked up by courier rather than queuing at a Post Office. Again, the designated drop off point could also be a pick-up point to avoid physical contact with the courier. Our live www.parcelhero.com/en-gb/uk-courier-services&source=gmail&ust=1583933246583000&usg=AFQjCNHmpHKR6ir0rnbzev-jGL8ACFZYag">UK courier services guide will keep everyone updated on what courier services are available to a particular destination as any potential outbreak develops.

‘Finally, there are a number of other issues of concern to customers and delivery drivers. Can people physically catch the virus from parcels or boxes? A new report in the Journal of Hospital Infection finds bleach and ethanol-based cleaning products seem to kill the coronavirus ‘within 1-minute exposure time’, so the risk of infection for customers can be cut to a minimum. What happens to drivers in the event of sickness is another issue. And here one of ParcelHero’s courier partners, Hermes, is setting a great example, by pledging £1million to support self-employed workers if they need to self-isolate as a result of the coronavirus. It has also pledged to help find someone to deliver on their behalf and guarantee that their rounds will be kept open for them for when they return.

 

"With the Government saying it is working closely with retailers to ensure that people who self-isolate at home get essential supplies, there needs to be a single approach to delivery protocol and employee welfare so shoppers and delivery drivers can feel secure."

 

Government relaxes rules on retailer delivery times

The government is to work with local authorities to extend the hours that deliveries can be made to supermarkets and other food retailers to help the industry respond to the coronavirus. As a result, food retailers can receive more frequent deliveries to stores from their warehouses as they look to refill their shelves.

 

The news comes after a call last week between the Environment Secretary and leading supermarkets in which the industry said a relaxation of curfews would help retailers respond to increased consumer demand for long-life food and hygiene product such as toilet rolls and hand sanitiser.

 

The change means that there will be a temporary relaxation in rules that usually say deliveries cannot take place overnight in order not to disturb residents.

 

Environment secretary George Eustice said today: "We have listened to our leading supermarkets and representatives from across the industry, and we are taking action to support their preparations. By allowing night time deliveries to our supermarkets and food retailers we can free them up to move their stocks more quickly from their warehouses to their shelves.

 

"Our retailers have well-established contingency plans in place and are taking all the necessary steps to ensure consumers have the food and supplies they need. I will continue to work closely with them over the coming days and weeks on this.

 

Andrew Opie, director of food and sustainability at the British Retail Consortium, said: "We welcome all efforts by government to provide supermarkets with greater flexibility in the way they supply their stores. While there is plenty of stock available, the challenge for retailers has been to make sure all of it reaches shelves at the earliest opportunity. It is essential that government continues to engage on other ways to alleviate the challenges for retailers."

 

A call today with representatives from across the food supply chain also covered ways of supporting vulnerable groups of people when they are in isolation and of implementing existing rules that allow for extensions on drivers’ hours to help respond to emergency situations when needed.

 

The rules would help the industry respond to any shortage of delivery drivers but would still mean drivers have to take 45 minute breaks after four and a half hours of driving to make sure drivers are properly rested. The government would work closely with employers on any use of these rules to make sure the safety of drivers and other road users is protected.

Opie said: “Our members continue to work round-the-clock to ensure consumers have access to the products they need. Retailers are putting in place the measures necessary to meet the current increase in demand. Where people are self-isolating, it is up not just to supermarkets, but also friends and neighbours to support them in getting the goods they need. This is a time for everyone to come together and support one another, particularly those who are vulnerable.

 

“Following requests by the BRC, we welcome the Government announcement that supermarkets with be granted greater flexibility in delivery times to help retailers mitigate the increase in demand for certain products. While there is plenty of stock available, the challenge for retailers has been to make sure all of it reaches shelves at the earliest opportunity.”

 

Supermarkets face panic buyers – but only in limited categories

Supermarkets are facing panic buying as shoppers stock up on items from toilet rolls, soap and hand sanitiser to pasta and other long-life goods. Some, including Tesco, are limiting the amount of goods in a small number of categories that each shopper can buy.

 

Andrew Opie, director of food and sustainability at the British Retail Consortium (BRC), told the BBC Radio 4 Today programme (c. 1h 15m) today that demand at supermarkets had been unprecedented but was focused on a very small number of categories.

 

“What they [the supermarkets] are trying to do is manage the stock that they have, to give as many customers as possible access to those products,” he said. “The limits that they have placed on them are really more than we would buy normally in our weekly shop. Supply is still great. It’s in the supply chain. It will take a little bit of time to get on the shelves but everything is running better than normal in the supply chain and in supermarkets at the moment. People can be reassured that products will be restocked and they will be on the shelves.”

 

He said that all retailers were working closely with suppliers to get goods in the shelves.

 

“The supply chain is producing more than it normally would do at this time of year but of course the demand is completely unprecedented in these areas. There’s a lot of conversations going on in the supply chain and we are confident suppliers are picking up the capacity. We’re going to see those on the shelves - and look at your supermakret, these are small problems in a massive supermarket.”

 

He said the BRC was also talking to government about issues from relaxing limits on delivery curfews and driver hours through to school closures, which he said would exacerbate problems in the workforce, added to the potential absences of up to 20% of the workforce in coming weeks through illness.

 

February footfall unaffected by Covid 19 – expect an impact in March

The latest footfall figures from Springboard, covering the five weeks from February 2 to February 29, do not show the effects of the coronavirus outbreak. But Springboard has warned that the impact is likely to be felt as more people steer clear of shared public spaces, and as cases rise.

 

Diane Wehrle, Springboard marketing and insights director, said: “The resilience of retail parks and shopping centres demonstrates that coronavirus did not have a noticeable impact on footfall in February – if Covid-19 had been a significant factor then it is likely that all three destination types would have been impacted more equally. However, the month ended before the warning of its increased severity in the UK was made, and so moving forward it is likely that shopper activity will be stemmed as consumers become more wary about interacting in public spaces. Whilst it seems that the first quarter of 2020 will yield yet more challenges for bricks and mortar retailers, experience has proven that footfall bounces back quickly once the immediate period of concern has passed.”

 

Image: Fotolia

 

 

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