InternetRetailing rounds up the latest news, insights and trends on how retailers and customers are responding to peak trading this year. We look at key areas where the shape of shopping was different this year from Christmas week onwards, and we look ahead to how it might change in the future. Non-essential shops are now closed across the UK in line with the latest lockdown rules announced on Monday night.
Fewer people went to shops over Christmas
The number of people who visited non-food shops was down by 64.4% in the week of December 20, compared to the same time last year, and down by 38.8% compared to the previous week, according to Ipsos Retail Performance’ Retail Traffic Index (RTI). The downward trend accelerated by Covid-19 was pushed still further by the introduction of Tier 4 to England in December – in which non-essential retail shops cannot open.
On Boxing Day, when Tier 4 was extended to still more areas, footfall fell again. Even in areas – Tiers 1 to 3 – where non-essential retail could open, footfall was down by 65.9% on last year and by 70.2% on the previous Saturday, according to the Ipsos RTI.
“These are bleak days for the high street,” says Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance. “Let’s hope that the winter sales bring some salvage, especially where retailers as a minimum can offer click-and-collect services. Where retailers are not able to open their doors, let’s also hope that as many people shift to bargain-hunting on-line as would normally venture out to find special deals.”
There were similar figures from Springboard, which showed a Boxing Day fall in footfall of 60% across all UK retail destinations on the same day last year. In Tier 4 areas – where non-essential retail is closed – visitor numbers were 75.9% down on last year. Even in areas where shops could open, footfall was 33.1% lower in Tier 2 and 38.5% lower in Tier 3.
Diane Wehrle, insights director at Springboard, says: “Boxing Day has been attracting less retail footfall each year in five of the past seven years, as shoppers turn online to grab the best bargains. Interestingly, Boxing Day has been evolving into more of a leisure-based day, with shoppers starting their trips later on in the day, and combining shopping trips with eating out and catching up with family and friends. The closure of hospitality in the Tier 3 and above means shoppers have remained at home and footfall has declined significantly.
“We undoubtedly expected a drop in footfall due to the closure of non-essential retail in tier 4, however it is evident that the repercussions of the Covid-19 pandemic are continuing to make retail destinations less attractive across tier 2 and tier 3 as well. This year, after spending so much time online, consumers are now experts at online shopping, whereby they know they can enjoy the same discounts, from the comfort and safety of their own home.”
In-store visits declined sharply after Christmas: Springboard
The number of people heading to shops to buy in the week after Christmas fell by almost a quarter from the previous week, and more than halved from the same time last year, new analysis suggests.
Footfall to UK retail destinations fell by 23.2% last week – beginning December 27 – compared to the previous week, according to Springboard. Shopping centres were hardest hit (-31.8%), followed by high streets (-21.9%) and retail parks (-16.8%). The only geographical area where footfall increased week-on-week was in the middle of London (+2.5%) – where Londoners may have come out to explore a relatively quiet Tier 4 city – although the figure was well down on the same time last year (-87.3%).
Compared to the same time last year, footfall across the UK was down by 55.7%. High streets (-64.6%) saw the biggest year-on-year (YOY) fall, followed by shopping centres (-60%) and retail parks (-31.9%).
The effect of local Covid-19 restrictions was reflected in footfall, with Tier 4 English locations (-72.2% YOY) seeing sharper dips than those in Tier 3 (-33.9%). Footfall in Wales (-70.3% YOY), Scotland (-68%) and Northern Ireland (78.3%) was sharply down on last year as lockdowns came into effect in those areas. Across England, where non-essential shops are currently able to open in areas outside Tier 4, footfall was 53.4% down on the same time last year.
Diane Wehrle, insights director at Springboard www.spring-board.info, says: “The end of the festive trading period and tightened government restrictions unsurprisingly saw footfall in UK retail destinations drop significantly at the end of 2020. Moving into a new year, with the extension of Tier 4 across virtually all of England and lockdowns in place in the devolved nations, retailers are unlikely to see any respite until restrictions are eased in the coming weeks or months.
“We know from our experience of retail reopening in June 2020 that until the widespread roll out of the vaccine, retail footfall will remain significantly below the pre-Covid level.”
Products sold out fast online – with discounting strategies varying between Europe and the US
Leading fast fashion retailers saw their products sell out quickly online to the same time last year. In the two weeks to yesterday, according to Omnilytics analysis. The retailers sold out products online at a rate that was 120% higher than the same time last year. But how they discounted European retailers discounted 16% more products compared to the same time last year, while US retailers cut prices for 5% more goods. Despite this, US products were more likely to sell out.
Omnilytics compared, for example, how H&M sold in the US and the UK. It found that in the US, the retailer spaced its discounting across different levels of discount, and the largest group of discounted products was found in the more than 1,660 SKUs where prices were cut by between 40% and 49%. In the UK, nearly 3,000 SKUs – or 15% of all products on offer – were reduced by between 50% and 59%. Its analysis suggests that shoppers were more likely to buy online than in-store, thanks to continuing European lockdowns and cautious shoppers.
A brighter future in sight
But, looking ahead, the KPMG/Ipsos Retail Think Tank (RTT) is more optimistic about the coming year. It says retailers can look ahead to a better outlook in the second half of the year, with sales expected to grow by as much as 3% – once shops can reopen from Covid-19 restrictions that are expected to continue well into the first quarter of the year. However, the grocery sector is likely to change for good as shoppers adopt new ways of buying.
The report sees the growth in online shopping as a result of necessity rather than choice. The consumer champion and think tank member Martin Newman says: “Online will continue to grow but at much slower rates than in 2020. I anticipate that growth will be back in the area of 10% to 15% down from the giddy heights of over 100% for many brands this year. As a percentage of retail sales, I expect that online will account for around 28% of total retail by year end 2021.”
The RTT suggests that pre-pandemic, online channels accounted for 7.1% of sales, increasing dramatically in the first half of 2020 and peaking at 13.7% in June. The home delivery and click and collect services, after seeing such increased uptake for the grocers in 2020, are set to remain popular next year. Huge investment has been made in fulfilment centres and new technology to service this increase in demand, and shoppers have grown accustomed to the convenience of home delivery.
Today is expected to be the biggest day of the year for goods to be returned to retailers, according to a Royal Mail study – which predicts that 63% more goods will be sent back today than in the average December day.
The delivery company says that its survey found that the average online shopper in the UK sends back a purchase every month, and three in five won’t use the same retailer again if they have a difficult returns experience. The most returned item is clothing – sent back by 61% of online shoppers – followed by electrical goods (38%) and footwear (35%). Clothing is most usually sent back because it doesn’t fit properly (39%) while non-clothing is sent back because it doesn’t work properly (23%). Almost a third (30%) use a try before you buy service when they send back. Eighty per cent say easy returns is an important factor when they buy, while 70% say friendly staff is most important.
Nick Landon, chief commercial officer at Royal Mail, said: “January is the busiest time of the year for returns – and we expect it to be even bigger this year given the significant move to online shopping over the 2020 festive period. Having a clear, user-friendly returns policy is a vital part of the online shopping experience. For retailers, ensuring their returns experience is in line with consumers’ expectations is key.”
Non-essential retailers close again as part of the latest lockdown
Non-essential retailers will close once again from January 5 as part of the latest Covid-19 lockdown. The lockdown is expected to continue at least until mid-February. Find out more here.