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Coronavirus round-up: latest from DFS and AO, plus how shoppers are buying, footfall figures, job retention scheme and more

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Coronavirus round-up: latest from DFS and AO, plus footfall figures, job retention scheme and more

We’re reporting on the effect of the Covid-19 coronavirus pandemic on the way UK shoppers buy – and on how retailers are responding to that changing behaviour. As of April 19 at 3.13pm, the UK had 120,067 confirmed cases of Covid-19, and 16,060 deaths in hospital. That includes 5,850 new cases and 596 deaths over the previous 24 hours.

 

 

DFS sees online sales rise

 

DFS says its online sales have grown by a fifth as its shops have closed during the coronavirus lockdown – and that it is planning to restart sofa deliveries once it has a “safe and workable approach” for two-person installation into customers’ homes.

 

Shoppers have not been able to buy in store from DFS group since March 25. Between March 25 and April 17, gross online sales at dfs.co.uk grew by 20.2%, with ongoing orders now worth £192m from £185m previously. The retailer says its DFS and Sofology brands are receiving inbound deliveries of customer orders from manufacturers in the Far East while Dwell is sending parcels from its accessories warehouse. Those sofas will be delivered to customers once that’s possible.

 

The retailer says it is in the ‘advanced stages’ of securing extra debt of between £60m and £70m with its existing lenders, adding to its existing £250m facility. The cash will enable it to keep working until sofa deliveries can resume. It is also preparing to raise further equity by issuing shares equivalent to up to 19.9% of its existing share capital.

 

DFS says it has worked with landlords and suppliers to reduce its costs to less than £14m a month until its showrooms, manufacturing and distribution operations can reopen.

 

 

Store visits plummet as lockdown bites

 

Store closures as a result of the Covid-19 coronavirus lockdown have seen the number of visits to UK stores fall by a record 44.7% in March, new figures suggest.

 

Non-essential retail shops were ordered to close in the week of March 23. In the preceding three weeks UK footfall was down by an average of 17.7%, according to the latest BRC/Shoppertrak figures, which cover the five weeks to April 4. But in the final two weeks of the month, store visits were down by an average of 83.2%. Read the full story here.

 

 

Government job retention scheme goes live

 

The government’s Job Retention Scheme went live online today. The JRS enables employees to stay on the payroll while being ‘furloughed’ and the government will pay 80% of their salaries while on furlough. The online application service is said to be able to support up to 450,000 applications an hour from employers – who should then receive the cash within six days to pay their April payroll.

 

Two million employers have already been emailed a five-step guide to claiming the allowance – along with warnings that scams are circulating. HMRC says there is no need to call unless there is a problem in order to keep lines free for those who most need help.

 

 

AO launches free timed deliveries for NHS workers

 

Electricals retailers AO.com is giving NHS workers both free delivery and the choice of what time their delivery will arrive as it looks to make it as easy as possible for frontline staff to get their appliances delivered at a time that suits them. NHS staff can also get a 10% discount

 

Those ordering from an NHS.uk or NHS.net email address, from doctors and nurses through to porters and care home workers, will be able to take up the offers.

 

David Lawson, managing director of AO.com, said: “We’re all hugely grateful to the NHS front line workers and this new service is just one of the ways that everyone in AO.com can show their appreciation. We know that shifts mean timing is everything with a delivery so this is designed to make it safe, hassle-free and easier for these frontline NHS workers to get their electricals at home at a time to suit their working pattern, and ultimately help them do what they do best.

 

“Now more than ever, AO’s products such as fridges, freezers, washing machines, cookers and TVs are essential for those who need to store food safely, provide clean clothes, hot nutritious meals and family entertainment.”

 

 

How – and where – shoppers are spending during lockdown

 

Shoppers are turning online to buy, according to new figures from Starling Bank, with more than 50% of retail sales passing through its accounts taking place online on every day except one between April 1 and 14. At either end of the range, 49.5% of sales were online on April 11, and 62.5% of sales were online on April 12.

 

The bank has analysed data from its 1.25m accounts, contrasting spending in the week ending March 15 2020 with the week ending April 5 2020, to find that retailers including Amazon(+39%), Argos (+49%), Asos (+12%), John Lewis (+13%) and Apple Store (+36%) are benefitting. But Boots has seen a 68.8% drop in spending from Starling customers between those two weeks. The health and pharmacy retailer has moved to close 60 of its shops in areas previously most used by office workers, shifting staff to meet demand in more residential areas.

 

Spending on video games has risen, with sales up at Playstation and Nintendo (+297.5%) while Deliveroo sales are broadly flat (-1%). The value of individual transactions has also risen in all areas of the UK, and especially in the South East (+62.7% to £86.75) and South West (+55.8% to £71.17). That may be because spending on smaller transactions in the week ending April 5 (compared to the week ending March 15) was down at locations including coffee shops (Costa and Starbucks -99%), transport companies (Transport for London -93.3%; Uber -84.3%) and petrol stations, where spending was down by more than 50% across a range of companies.

 

 

Clothing and footwear spending set to fall more than a quarter

 

Clothing and footwear spending is set to fall by more than a quarter – or £14bn – in 2020, compared to 2019, new research suggests. The predicted fall is expected to come as stores have closed their doors.

 

Chloe Collins, senior retail analyst at data and analytics business GlobalData, said: “As the government has extended the UK lockdown for at least three more weeks, we expect that offline clothing and footwear sales in 2020 will further contract, falling 33.6% on the year, as the demand for fashion is increasingly decimated. With other European countries, such as Austria and Italy, gradually loosening their restrictions and keeping most non-essential stores closed, we expect fashion stores in the UK to remain shuttered for a number of weeks once the lockdown is eventually lifted, and not begin reopening until June.”

 

Even then, predicts Collins, people let out of lockdown won’t immediately rush to shops. Instead, they’ll take time to catch up with family and friends, while remaining cautious about visiting crowded areas.

 

“We expect several retail casualties within the fashion sector in the coming weeks, with Debenhams, Oasis and Warehouse already entering administration, and Arcadia said to be considering more store closures.”


Online sales of clothing and footwear are also expected to fall – but less sharply – with a 7.9% decline predicted. This will not, however, be enough to offset the loss in spending in-store.

 

Collins added: “After initially closing on March 26, Next reopened its website last week, though at limited capacity due to enhanced safety measures, which has put pressure on other players with closed online operations to follow suit. Quiz, Fenwick and River Island have all resumed selling online again, and TK Maxx has made its website available for browsing only, though it should aim to restart warehouse operations as soon as possible so that it can take orders, as it has strong potential to drive sales of activewear during the lockdown.”

 

The Central England Co-op rewards staff with an extra week’s pay

 

The Central England Co-op has rewarded staff with an extra week of pay for going above and beyond during the coronavirus outbreak.

 

The retailer, which covers the West and East Midlands as well as Yorkshire and the East of England, is to pay the extra cash to its frontline staff in stores, funeral homes and distribution hubs via their June pay packet.

 

Shoppers prepared to pay more during pandemic: study

 

Most (69%) shoppers are still buying their groceries in-store, despite the Covid-19 health crisis. And most (95%) put shortages down to other shoppers’ behaviour, with only 5% putting the blame on grocery stores, according to the Toluna Covid-19 Barometer.

 

The barometer, which questioned 1,068 people between April 9 and April 14, found that 41% thought retailers were helpful. Asked how they had changed their behaviour in the light of the coronavirus lockdown, 65% had gone without something they would usually buy. Others said they had tried a new product (26%) or a new brand (28%) when they could not buy their usual item, while 47% had paid more than usual for something they would have bought before the pandemic. Some 54% said a specific brand was important to them, and 46% said it was not. When forced to choose between brand and product, 47% said they would try a different brand of deodorant, toothpaste or shampoo but not a different product, while 39% would buy a different brand of alcohol but not a different type.

 

Lucia Juliano, head of CPG and retail research at Harris Interactive and Toluna, said: “The COVID-19 pandemic is revealing interesting sentiments among consumers about retailers and brand loyalty too."

 

She added: "Brand loyalty is still important for people but when forced to choose between brand and product when their preferred brand isn’t available, they will turn to an alternative product.”

 

Call to free up global trade after coronavirus

EuroCommerce director-general Christian Verschueren has called on political leaders to free up global trade after the Covid-19 pandemic.

 

He said: “Before the virus became a global crisis, we saw a worrying spread of an equally pernicious development – the mistaken belief that economic growth can come from imposing tariffs and blocking imports. If we are to see the world economy start growing again after a downturn maybe as bad as in the 1930s, world leaders should get together now to agree on how to do so. Above all, they need to avoid the same mistakes made then of closing down international trade. Supply chains are complex and global, and these need to stay open if all of our economies are to recover quickly.”

 

Verschueren says that retailers and wholesalers depend on cross-border and global trade to get consumers the products they expect to see in the shops, or the components manufacturers need to stay in business. He says that all economists are predicting the impact of the virus will depress all countries’ GDP significantly and, with uncertainty about the future of people’s jobs, consumer confidence is as low as it was after the financial crisis of 2009.

 

He points to WTO warnings that world trade may drop by 30% by the end of the year unless governments act to avoid this happening. While there may be sound reasons to look to onshore some activities to create additional resilience and achieve certain sustainability goals, the worst thing governments can do to their own and the world’s economy is to depress it further with protectionist policies, whether by imposing tariffs or by protecting uneconomic state-owned enterprises.

 

He added: “Global trade has been the reason for the unprecedented rise in prosperity, lifting millions out of poverty since 1948 when the GATT was formed. The EU has led the world in resisting the mistaken policies of some major trading partners who believe that trade is a zero-sum game. It should continue to do so, and other trading partners should do the same.”

 

 

Image courtesy of DFS

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