InternetRetailing rounds up the latest news, insights and trends on how retailers and customers are responding to a very different peak trading season this year. This year the pre-Christmas shopping period has been changed by Covid-19, with non-essential retail closed during lockdowns in England and Wales during much of November, and now shut once more in Tier 4 areas across the South East and London.
Non-essential retail dealt ’crippling blow’ by fresh Covid-19 closures across Wales and in London and the South East
Governments in England and Wales have responded to a new mutation of the Covid-19 virus over the weekend by imposing new restrictions. Non-essential retail is now closed across Wales and in a new Tier 4 that currently includes London and much of the South East, including Kent. In Tier 4, retailers can continue to sell online for click and collect pick-up and to sell online for home delivery.
Richard Lim, chief executive of Retail Economics, says this will be a “crippling blow” for businesses in London and the South East.
“Thousands of retailers are hanging on by a thread, hoping to trade through these vital days before Christmas to strengthen their financial positions after months of disruption,” he says. “It is essential that adequate Government support is provided for an industry already on its knees.”
He says that online will not solve the problems raised by store closures. “For many shoppers, a last-minute rush to order presents online will come too late as retailers struggle to cope with the sheer volume of orders. Online capacity has already been exceeded for many retailers and a last-gasp attempt for some is likely to push operations beyond their limits.”
Many retailers selling online have already passed their final dates for guaranteed pre-Christmas delivery.
Helen Dickinson, chief executive of the British Retail Consortium, says: “We recognise that the government has difficult decisions to make and the situation with the pandemic is very fast moving, but this is hugely regrettable news. Retailers have invested hundreds of millions of pounds making stores Covid-secure for customers and staff, and Sage’s advice has said throughout that closing non-essential retail has a minimal impact on the spread of the virus.
“The consequences of this decision will be severe. For businesses, the government’s stop-start approach is deeply unhelpful – this decision comes only two weeks after the end of the last national lockdown and right in the middle of peak trading which so many are depending on to power their recovery. Faced with this news – and the prospect of losing £2bn per week in sales for the third time this year – many businesses will be in serious difficulty and many thousands of jobs could be at risk.
“The government will need to offer additional financial support to help these businesses get back on an even keel – an extension to business rates relief in 2021 is the best place to start.”
The Tier 4 effect on footfall
The number of people visiting shops in the new Tier 4 fell immediately, according to new data from Springboard. It found that on Sunday – the day after the new tier was announced – footfall fell by 39.9% compared to the previous week, and by 64.3% lower than the same time last year. The fastest fall was in shopping centres (-55.5% week-on-week, -75.5% year-on-year), followed by high streets (-39.1% WOW, -71% YOY) and retail parks (-25% WOW, -38.1% YOY).
Before the introduction of Tier 4, footfall had been on an upwards trajectory, and Springboard says visitor numbers were up by 2.3% in the week from Sunday December 13 to Sunday December 20, with shopping centres (+6.2%), retail parks (+4.9%) benefitting, although visitors to high streets were down by 0.8% on the previous week.
Diane Wehrle, insights director at Springboard, says: “The government’s shock announcement on Saturday afternoon with the introduction of Tier 4 has led to drastic changes in retail footfall across the UK.
“The closure of non-essential retail in Tier 4 during what is usually the last, and busiest, week of Christmas trading will have a hugely detrimental impact on retailers who have already had a difficult year. Store vacancies have risen in each quarter this year, and we anticipate that they will rise further in 2021 as some businesses will be forced to cease trading.”
How logistics are set to be affected by the new Covid-19 mutation
France’s decision last night to guard against the new Covid-19 mutation by closing its borders and ports to inbound traffic from the UK for 48 hours has delayed traffic both ways at a critical point in the peak trading season, says David Jinks, head of consumer research at delivery specialist ParcelHero.
Added to a likely surge in last-minute online ordering as non-essential shops close in Tier 4, that’s likely to mean that many orders arrive late, he says.
“There is now unprecedented pressure on supply chains and deliveries. Everyone must brace themselves for items not arriving in time for the Big Day,” says Jinks.
‘Retailers need to talk to their supply chain managers and delivery partners and get real about what can still be achieved. Some of their online final order dates now look highly optimistic.
‘Operation Stack, the emergency plan devised for a no-deal Brexit, was put in place, but there are still miles of container trucks backed up towards Dover as French ports temporarily closed to UK lorries and cars. This will have a knock-on effect on deliveries to the UK. The number of trucks arriving in the UK from the EU has been slashed as businesses and drivers could not risk their trucks being caught in huge delays returning to France.
“This crisis is compounded by the unexpected shuttering of thousands of High Street stores just days before Christmas because of emergency Tier 4 measures. Many thousands of shoppers have been forced into unplanned, last-minute online shopping, leading to a surge in orders in the last few days before Christmas.
‘Not only retailers need to reassess the situation. We all need to get realistic about how much ordering we can still achieve before the 25th. Even before Christmas peak began, most couriers and retailers were dealing with 50% more home deliveries because of the impact of Covid-19.”
Sainsbury’s warns of fresh vegetable and fruit shortages
Sainsbury’s is reported to have said that fresh vegetables and fruit imported from Europe could soon be in short supply if port closures continue.
“If nothing changes, we will start to see gaps over the coming days on lettuce, some salad leaves, cauliflowers, broccoli and citrus fruit – all of which are imported from the continent at this time of year,” a spokesperson told The Guardian.
Big spending Monday still expected in the UK, despite the latest lockdowns
Shoppers are expected to spend more than £1bn today on last minute Christmas shopping, despite the Tier 4 and Welsh non-essential retail closures.
The VoucherCodes.co.uk Shoppin
The figures have been tweaked since Saturday’s announcement. Before that, the report forecast £1.3bn would be spent during a Panic Monday – up from £1.29bn in 2019. That’s now revised down by 18% – with the expectation that those in the new Tier 4 equivalents will only spend £358m today.
Elsewhere in the UK, shoppers are in Tiers 1, 2 or 3 are predicted to spend a combined total of £703m today, as 8.98m shoppers cross the UK visit both essential and non-essential shops.
Anita Naik, lifestyle editor at VoucherCodes.co.uk, says: “The last full week before Christmas is always a busy period for retailers both offline and online. The latest restrictions and introduction of a new Tier 4 is likely to have caused people to panic more so than they usually would, and many will be using today to stock up on food and drink items ahead of Christmas Day. ”
Boxing Day sales set to move further online
The day after Christmas Day has been big online for retailers in recent years. That’s likely to be even more the case this year, as shops will be shut in Tier 4 areas of England and Scotland as well as across Wales.
Brian Walker, CSO at Bloomreach, says: “Boxing Day sales are set to look very different in the UK this year, with the majority taking place online. The recent government announcement that London and much of the South East will spend the foreseeable future in tier four means non-essential retailers have to close. Despite this, many consumers will want some retail therapy and will be turning online to get their Boxing Day bargains. Bloomreach data shows that ecommerce sales have been up around 10 to 12% throughout this year versus 2019 and we are likely to see this trend continue or increase as a result. With many consumers locked in their homes, we have seen a large spike in home furnishing sales and Bloomreach data shows sales up 75% year-on-year in November. With the prospect of a January in tier four lockdown, it is likely that this spike will continue and consumers will splurge on at-home items this Boxing Day.
“Retailers must ensure they are prepared for this online Boxing Day event. With such a high percentage of consumers shopping online, it is vital that brands invest in their direct ecommerce strategy. A great ecommerce experience has become table stakes for every brand.
It is also notable to see the difference in results across the pond, as North American retailers and brands have seen a markedly better result this Holiday season, with sales up 40% year-over-year, versus the U.K.’s 9%. No question that the pandemic and uncertainty related to Brexit has contributed to a relative tightening of consumer spending online in the UK market.”
Online sales will grow by 56% to £1.8bn on Boxing Day. according to Centre for Retail Research analysis, for the VoucherCodes.co.uk Shopping for Christmas 2020 report,
But high online sales is unlikely to compensate for store closures. Spending on Boxing Day will reach £3.2bn – more than a quarter (26%) down on the same day in 2019, according to the CRR.
The CRR has reduced its shopping forecast for the rest of the Peak 2020 trading season following the Tier 4 announcement on Saturday. It previously expected that £12.7bn would be spent between Boxing Day and December 31. Now it expects that will come to only £10.6bn – 17% down on the original forecast, with shopping in London most sharply affected. There, spending at bricks and mortar retailers is expected to fall by 76% to £187m on Boxing Day, down from £779m previously forecast.