The impact of COVID-19 has hit retailers in different ways. We are now beginning to see the official figures and some retailers have provided updates. As anticipated in a previous post, the April sales figures for Scotland showed a massive impact on non-food retailing especially. The graphs below show the exceptional historical nature of what we are living through, followed by a close up of the impact compared to the last year or so.

O

ONS figures released last week make exactly the same point. The headlines are worth repeating as they show the damage inflicted but the varying outcomes for different retailers and retail sectors. For many retailers of course, deemed non-essential, the business has essentially gone into deep freeze.  This is particularly the case for small retailers in non-food.  Some have been able to move sales online and tried to keep going that way. But many have simply been forced to shut up shop. The ONS headlines show:

• The volume of retail sales in April 2020 fell by a record 18.1%, following the strong monthly fall of 5.2% in March 2020.
• All sectors saw a monthly decline in volume sales except for a record increase in sales for non-store retailing at 18.0% and a continued increase in sales for alcohol stores at 2.3%.
• The volume of clothing sales in April 2020 plummeted by 50.2% when compared with March 2020, which had already fallen by 34.9% on the previous month.
• The proportion spent online soared to the highest on record in April 2020 at 30.7%, which compares with the 19.1% reported in April 2019.
• All store types, except non-store, reached record proportions of online spending in April 2020 as some stores shifted to online only trading.
• The three-month on three-month growth rate in the volume of retail sales decreased by 8.6%, with declines across all sectors except food and non-store retailing.

These are remarkable figures.

We are also now beginning to see major multiple retailers report their sales over this period.  These are of course unaudited sales figures, and there is no accurate word on profitability (most grocers say their extra costs have broadly been met by their savings from rates relief), but the figures do give some inkling to different fortunes and to the impact of the virus. There are too many such retailers to cover them all here, but three that caught my eye are considered: Sainsbury, Next and Kingfisher – in turn mainly food, a non-essential clothing retailer with a strong online offer and a DIY essential retailer with an online arm, operating across a number of countries.

Sainsbury

The figure shows the problem that emerged in food retailing.  A massive week on week increase (40%) up in March followed by a return to normal food business.  Morrisons more recently reported a boom followed by a below trend sales and then stability.  Huge fluctuations between and within weeks makes supply systems difficult to manage.  In clothing and fuel the impact of lockdown is clear.

Next

Next had at the outset a more balanced online and store portfolio.  On lockdown the store component was shut being ruled non-essential but online could continue.  In practice, Next could not make the distribution operations for online work safely and so had to shut down to rethink.  Slow opening of the online channel then followed. All this is clearly shown in the graph, which also shows the massive impact on sales.

Kingfisher

In the UK Kingfishwer operate B&Q and Screwfix.  Both were allowed to continue to operate, but the stores proved problematic under social distancing.  They had to be closed to rethink safer operations before being reopened, intially with click and collect and home delivery, and then latterly with store openings under strict social distancing.  The graph shows the performance of the UK and Ireland, but also France and Poland. In France, as in the UK, the company closed the stores, but then introduced click and collect and home delivery. All stores are now open for a “self-service” range. In Poland all stores remain open but operating under strict conditions, and with click and collect and home delivery. In addition to Sunday closing (the law) Saturday trading was temporarily stopped, but has now restarted. As of 12^th May, Spain (not on graph) and Ireland remain closed.

The second graph compares store performance and e-commerce performance over the same period. The vital importance of operating click and collect and home delivery as well as online is clear. Whilst e-commerce is not of the same scale as the store operations it has allowed sales to continue and indeed to expand in that channel.

All these businesses are operating under strict social distancing. Kingfisher note stores are operating with:

• Colleagues in gloves, masks and visors
• Limiting number of customers in store
• Safe queuing before entering the store
• Sanitiser stations throughout the store
• Floor navigation markers to help enforce social distancing
• Perspex screens at checkout
• Contactless or card payments only

This is the new retail store.  It remains unclear how customers will react to this, if retailers can make it work profitably once support is removed and whether consumers will continue to operate online as opposed to visiting stores.

If this is what large retailers have experienced and have had to adapt to in order to sell, then spare a thought for the small independent retailer who will have an even greater adjustment to make. And for all their employees, whether working or not at the moment. Will the online and home delivery models developed out of necessity prove to convince customers of their difference and dedication to serving communities? It is to be hoped so. We shall begin to see how this plays out as lockdown gets eased.