For the last post in our Shopping after Covid-19 series, we will examine how retail has fared throughout the pandemic and try to predict what will happen to retail as we emerge from it.

The coronavirus pandemic led to the closure of non-essential shops for months across the UK, which resulted in total retail sales falling by 1.9% (compared with 2019 figures) – the largest annual fall ever. Clothing sales experienced significant falls of 21.5%. However, whilst on average retail sales did fall, “online sales rose to a record high of 33.9% as a share of all retail spending”.

Predictions for retail after coronavirus

E-commerce

E-commerce usage will continue to rise. 9 out of 10 of the top global e-commerce companies saw double-digit revenue growth in 2020, whilst Amazon saw a revenue of $386.1 billion. In 2021, global e-commerce sales jumped to $26.7 trillion, fuelled by the pandemic. The pandemic has led to more customers becoming comfortable and adept with online shopping. The closure of the high street has driven customers online.

Many well-known British retailers had been struggling before the pandemic, however, lockdowns and coronavirus restrictions have exacerbated their difficulties. The Arcadia Group went into administration in November 2020 after the pandemic greatly impacted its sales. However, online fashion retailer ASOS, acquired Arcadia-brands Topshop, Topman and Miss Selfridge but announced that their deal excluded high street stores. Topshop, Topman and Miss Selfridge products are now only sold online through the ASOS website.

Apparel

Clothes sales fell enormously during the pandemic. In the UK, apparel sales fell by 25% - the biggest fall in 23 years. Teenage girls are leading the recovery in spending following the easing of coronavirus restrictions. Nearly 30% of upper-income female teens’ wallets are earmarked for clothing as the pandemic has inspired fashion trends.

Additionally, following its reopening in April 2021, Primark was able to hand back £72 million in furlough payments to the government after record sales due to its reopening. Therefore, it seems that the apparel sector will quickly recover as Covid restrictions come to an end.

Groceries

Deloitte has forecasted that going forward in 2021, the “at home economy” will continue – “consumers will continue to prioritise spending on cooking from scratch, eating at home, shopping online and consuming digital services”. The pandemic led to a doubling of online grocery shoppers in the UK. Online grocer, Ocado saw a 20% jump in sales during the pandemic and the proportion of food shopping done online doubled to 14% during the pandemic, compared to 7-8% before the pandemic.

Travel

Deloitte predicts that there is “considerable pent up demand for big ticket and discretionary items”, such as travel. Consumers have been able to accrue savings during lockdown – consumers across Europe are estimated to have over €450 billion of savings. International travel has been at a standstill for the last 18 months and consumers are eager to travel again.

The travel industry is expecting consumers to spend on holidays after restrictions are eased. When the UK government announced that fully vaccinated travellers returning from amber-list countries will not have to isolate after 19 July, booking for flights and holidays soared by 400% according to EasyJet.

Unemployment during the pandemic may hinder retail’s comeback

However, whilst some consumers have been able to save during the pandemic, the UK has been facing an unemployment crisis. Millions of workers in the UK have been placed on furlough and the Office for Budget Responsibility expects the jobless rate to more than double compared to pre-pandemic levels. In 2020, UK unemployment rose to 5% for the first time since 2016. Therefore, a large number of consumers will continue to be cautious about how they spend their money and will seek to prioritise retailers which ensure good value for money.

Consumer spending, however, is still forecasted to grow by 7.6% in 2021 and by 3.9% in 2022. Online shopping is expected to continue its dominance after the pandemic, whilst retailers will have to ensure the in-store experience feels safe and hygienic for consumers who will be battling shopping anxiety after the pandemic. Retailers will expect a change in consumer behaviour as their priorities change.


This is the final post in the Shopping after Covid-19 series. Read our previous post here.