What’s in store for retail when the COVID-19 lockdown ends?
Piece provided by Real Business Rescue.
Retail businesses face extremely challenging trading conditions as the COVID-19 lockdown ends and non-essential high street stores start to reopen their doors. Given that footfall was already falling before the outbreak took hold, the pandemic-driven drop in consumer spending means it could be a long haul to recovery.
Major retailers and department stores, including Oasis, Warehouse, and Laura Ashley, have filed for administration during the COVID-19 outbreak, so what is in store for retail as a whole after the coronavirus lockdown ends?
Enticing shoppers back into stores
Safety will clearly be a priority for customers and staff, and retailers that can effectively market a ‘new normal’ – strict social distancing, well-positioned hygiene facilities in-store, a safe checkout experience, and controlled numbers – may stand a better chance of success.
As Real Business Rescue’s Yorkshire Regional Managing Partner, Julian Pitts, pointed out in a recent article, there is hope for the future of retail in the UK,
“Traditionally quieter times for hospitality, retail, and travel providers may end up being busy with people keen to make the most of their new-found freedom and this pent-up demand could prove to be their saving grace.”
Not a level playing field
It is certainly not a level playing field for retailers, however. Store layout dictates how successfully social distancing can be implemented, so unless money is spent on redesigning floor space, some storeowners will find it easier than others to control shopper numbers.
Fashion retailers may also have a harder time than other retail sectors due to the nature of typical shopper interactions. It is natural to pick up and handle clothing in-store, and to try items on, which creates further safety issues for staff and visitors in terms of managing the changing room environment.
So how will these and other retailers encourage consumer spending, and could shopper habits have already changed for good?
Encouraging consumer spending
With significant job losses and general uncertainty about future incomes, people who only a few months ago were enjoying meals out and spending on the high street without thinking twice, may now reconsider their outlay on non-essential items.
As Julian explains, it could be years rather than months before the economy recovers if consumers decide to keep tighter control of their disposable income,
“Discretionary spending has been a huge driver in propelling the economy forward over the last couple of years; however, there is now the very real possibility that spending to the same level may not return for a number of years.”
Deferring the pain
Retail businesses of all sizes have taken advantage of the considerable government support that has been made available, which has helped to prevent total economic collapse. When deferred tax payments and rent arrears need to be repaid, however, and loan interest paid back, retail businesses will have to rely heavily on footfall and consumer spending to survive.
Although some consumers will be motivated and hugely relieved to shop on the high street once again, others may need a little more encouragement – gradually gaining customers’ trust, therefore, is vital as we progress through these most challenging of circumstances.
As Julian describes, it is not going to be a quick recovery for retail,
“If Wuhan’s recovery can show us anything, it is that patience will be required; just because the country is ready to reopen for business does not mean consumers will be ready to return to their old ways.” If you would like to find out more about dealing with COVID-19 challenges and the potential rescue procedures available for businesses, please call Julian and his team at your local Real Business Rescue office in Leeds.