A study conducted by St Andrews and Heriot-Watt universities has found consumer spending in the UK has gone down by 32% during the coronavirus epidemic.
This has had a major impact on the retail industry, with 96% of retailers reporting cashflow difficulties. This is according to a survey carried out by the Confederation of British Industry (CBI).
Furthermore, over two-thirds of retailers said the outbreak has had a negative impact on their sales. CBI carried out the survey between 27 March and 15 April1.
Lucy Hebron, finance business partner at BHSF, believes it’s no surprise the lockdown has hit the retail industry and its employees so hard.
“It’s been a tough time for retailers as consumer spending has dropped considerably under lockdown. A survey conducted for Barclaycard found almost nine in ten people have saved money on everyday expenses since lockdown began2.
“It’s sad to see Debenhams, Oasis and Warehouse group and Cath Kidston fall into administration as a result of a collapse in sales caused by coronavirus restrictions3. Following the closure of Oasis and Warehouse stores, over 1,800 people were made redundant after being put on furlough.
“Casual Dining Group, the company behind restaurant chains Bella Italia, Café Rouge and Las Iguanas, has filed a notice of intention to appoint administrators which could put 6,000 jobs at risk4. Clarks has also announced it’s to cut around 1,000 head office jobs5.
“It’s obvious lockdown has had a major impact on retail operations with so many people losing their job. For employees who have been made redundant as a result of the epidemic they may now be thinking, ‘how am I going to pay for food, the mortgage/rent and how am I going to get back into work?’
“For those currently working in retail and on furlough, they may be asking how safe it will be to return to work and will I have a job to go back to. This could lead to doubts for an employee and place unnecessary stress. It’s down to employers to provide clarity and assurance.”
High street retail shops may be closed. However, online retail sales have increased substantially. Data from IMRG Capgemini Sales Indexes found UK online retail sales rose by 22% in the first week of April, compared to the same time last year6.
With many high street retail stores still closed, Hebron believes the pandemic has caused a shift in consumer behaviour which could become the new normal.
“The lockdown effect has led to new shopping behaviours and a focus on essentials during these challenging times. Customers have become accustomed to turning online to fulfil shopping needs as non-essential retailers remain closed.
“Even once this is all completely over, and people can shop and socialise normally, it may take a while to adjust which could see consumers continuing to shop online.
“With regards to online grocery shopping, once people get into the habit of doing it, it could become a routine and you don’t go away from it easily. This could apply to high-risk groups like the elderly, many of whom would never have envisioned themselves undertaking online purchasing.
“When retail stores do open, providing it’s safe to do so, they may reopen with big discounts to entice customers. However, that may not be enough if consumers are still feeling anxious and cautious about returning to high street stores.”
Nevertheless, Next have already made plans to reopen in a socially-distanced world. Measures include installing screens at tills, placing sanitisation stations in stores and managing the number of customers allowed to enter their stores7.
Hebron adds: “For retailers, it’s all about reassuring people safety measures are in place and government guidelines are adhered to. The steps Next have put in place to reopen is positive and also indicates there may not be an entire shift away from the traditional front of house employment.”
If you have any financial concerns or need money advice, we’re here to help. Call us today on 0800 622 552 or visit www.bhsf.co.uk/bhsf-connect-app.