The UK high street of June 2021 seems likely to be similar to the high street of January 2020. Overall, talking to both consumers and retailers, the mood feels positive. Everyone is looking forward to some semblance of “normality” and ongoing stability after the ructions of Covid. That stability is beginning to show itself. Some non-essential shops on the high street have been open since April.
Backed up with news of the mass vaccination rollout and the development of rapid tests, this time there’s a feeling that we might have had the last of the lockdowns. Before non-essential shops and hospitality opened, ONS figures showed that retail spending was high, growing by 5.4 per cent in March 2021. People were rushing to buy new clothes, shoes and accessories online. This pent-up demand is going to give a boost to retail sales in the coming months.
Even so, retailers know that there will never be a return to “normal.” Consumer expectations may have shifted permanently, while wider social and cultural changes will affect everything from retail to work and family life. The legacy of Covid-19 will remain imprinted on the economy far beyond 2021. When it comes to the lasting consequences for retail we are already beginning to see what those might be.
A strong re-opening
Back in December 2020, the KPMG/Ipsos retail think tank predicted that, despite all the challenges, many people would get out and spend when the shops reopened in 2021. The pre-opening figures from March were promising, but the real picture will only become clear now that the high street has begun to open in full.
Early figures from the Ipsos Retail Recovery Index show that, during 2021’s first week after re-opening, footfall was down by 28.9 per cent on its 2019 level.
One of the central issues that will dominate the future of retail is the question of where people choose to shop—will they opt for the traditional retail zones? Or will they go elsewhere? Our figures show that former shopping hotspots in city centres including Birmingham, London and Manchester weren’t the fastest to recover in the opening week. Instead, smaller, local high streets thrived as Worcester, Romford and Derby bounced back the fastest. Shoppers have re-discovered their connection to their local neighbourhood. They seem to be attracted to the value of local provenance and the convenience of local stores (especially if working from home). Above all this, there is the safety issue. Shopping close to home is seen as somehow safer.
Central London locations suffered the worst footfall comparisons, with the City of London down 58.8 per cent on the same period in 2019. The West End was down 45.6 per cent. Aside from central London, other places hardest hit included Oxford (down 41.9 per cent), York (41.5 per cent) and Cambridge (37.3 per cent)—these are notably all important tourist destinations.
People are still nervous about travelling on public transport and shopping in busy retail hubs. Furthermore, because most commuters have not yet returned to their city centre offices, shops there are really struggling with much lower footfall, despite projects such as the Oxford Street mound—a new, 25m-high feature by Marble Arch.
Future challenges
There are clearly lots of remaining challenges for retailers, with differing levels of customer confidence across different communities and cohorts. In addition, the economy is undergoing wider cultural shifts. There is a movement away from conspicuous consumption and towards ethical sourcing. The consequences of this change alone will be profound for the retail sector.
However, the outlook is still good if businesses act smart. According to Deloitte, UK consumer confidence levels rose from 6 per cent in the last quarter of 2020 to 11 per cent overall in the first quarter of 2021. This is mirrored globally. Ipsos’s Global Consumer Confidence Index in March rose to 45.5, which is just three points below its reading in March 2020, shortly before the declaration of Covid-19 as a pandemic.
Alongside consumer confidence, retailers must take into account customer preferences, and public confidence in the idea that society can return to something similar to pre-pandemic life. People are divided on that question. In a worldwide Ipsos poll last year, the majority of respondents in 12 out of 14 major countries said that if businesses are allowed to reopen, they would still be nervous about leaving their homes.
Then there is the question of people’s willingness to spend. While consumers have certainly missed their retail therapy, they have also missed out on other things—socialising and leisure activites. On the one hand the household savings ratio looks favourable for the high street, but on the other, the fact that savings growth has been highest among the wealthier and elderly could indicate that retail will fare worse.
“UK customers are ready to shop. but how can retailers create a comfortable experience in their bricks and mortar stores?”
One last trend to mention is the growing expectation on the part of customers that they can have what they want in an instant. According to Google, in the early months of the pandemic, searches by Americans for the terms “who has” and “in stock” were up over 8,000 per cent year on year. This offers an insight into a behavioural shift that retailers will have to incorporate into their thinking when creating the digital shopping experience that is needed after Covid-19.
Retail’s response
Despite the advances in online shopping, retailers shouldn’t forget the emotional experience that in-store visits can provide. Trying on a wedding dress, choosing decorations for a first home or even simply meeting up with friends are all important moments for the consumer, and these can only take place in the outside world. Generally, UK customers are primed and ready to shop, but how can retailers create a comfortable and relevant experience in their bricks and mortar stores?
Even with the mass vaccination programme, sanitisation expectations and restricted occupancy levels will remain in place for the foreseeable future. Ignoring this guidance not only puts stores at risk of hefty fines, but could see customer confidence dip, hurting the reputation of a brand. Retailers will have to invest in reliable fixes—such as bringing in accredited auditors to help keep safety standards high in the long term.
Technology use by the retail sector has skyrocketed during the pandemic and it plays an important role in ensuring Covid-19 safety by monitoring in-store numbers. It also provides an efficient and streamlined shopping experience. Customers are now used to searching stock levels in an instant online. In this world, you can’t leave shoppers to browse the rails only to find the item is gone. The question is how you can recreate the smooth and speedy online experience in a shop.
Retailers will be looking to capitalise on the success of “click and collect” over lockdown. They will need to ensure that spaces are set up in-store where customers can pick up their purchases, with the right digital infrastructure in place to provide a smooth transaction. Building on this, we may now see embedded technology used more widely to provide more information, such as QR codes or even motion detectors that can offer new and exciting experiences.
Of course, these investments shouldn’t be limited to existing flagship stores. With city centre footfall currently in the doldrums, now more than ever it’s crucial to pay attention to localised trends. The retail industry must get used to the idea that it now operates at a more
local level.
The UK high street of today may feel similar to that of last year, but compare it to 2019 and there are stark differences. Familiar brands such as Topshop and Debenhams have disappeared completely. PwC, the business services firm, has identified 29 major restructuring plans by retailers, hospitality, leisure and other consumer-based companies. The latest data from the British Retail Consortium reveals that one in seven shops lie empty after lockdown.
However, shoppers will vote with their feet and there’s clearly a strong urge to get back out to the retail areas they once knew—but the subtle differences must be kept front of mind as a new future emerges for the sector. One thing we can be sure of is that both the great British shopper and British retailers are resilient animals and will build the new future for shopping together.
