There are still three hugely important ‘unknowns’ which I believe hold the key to the future health and recovery of the UK retail sector ‘post-COVID’
The first should become clearer from mid-April, when ‘non-essential ‘stores can reopen (in England) and shoppers are then able to freely return to their local High Streets, town and city centres.
But although the COVID rules say these stores can start to trade again, will they all choose to do so? And just because all these ‘non-essential’ retailers can open, will shoppers choose to return to physical stores?
According to data from LDC, an interesting precedent from last year (when the first COVID lockdown ended in early June) was that 20% of ‘non-essential’ retailers still hadn’t reopened by the end of September/early October 20201 when England then entered regional tiered lockdowns.
However, longer term I am convinced most people will eventually return to shop in stores because they crave that human connection. This social aspect of shopping (whether the marketplace or the meeting place) cannot be underestimated as it’s been central to our town and city centres since Greek and Roman times.
However, in the short term I just don’t think most shoppers will be rushing out in huge numbers next week to travel on public transport to their town and city centres. I may be wrong and there will be queues outside Primark, but it will take several weeks before a realistic pattern of ‘post lockdown’ footfall is established.
The second unknown is over a slightly longer period and focuses on whether the millions of ‘commuting office workers’ across the UK either choose to return to their pre-COVID office locations – or indeed are required to do so by their employers.
However, I believe that after a full year for so many people of ‘WFH’ because of COVID, the UK working landscape has changed forever. Already some major employers (including for example Nationwide, BP, RBS, and IBM) are signaling to employees that going back to a full five days a week in the office won’t happen and some form of blended or mixed home and office-based work is the future.
This is supported by a recent study from the Centre for Economics and Business Research (CEBR) found 32 per cent of office-based staff are expecting to partially work from home even after lockdown ends.
This has huge implications for retail, particularity in London and all the major regional cities including Nottingham and has already caused havoc for city centre retail even when retailers can reopen and trade – not least for those located at the major commuter transport hubs.
The retail beneficiaries of continued WFH are of course the more local, suburban shopping streets and in particular those independent retailers who often occupy these locations. This has been driven not just by working from home but also but linked to an increasing sense of both place and community by many shoppers.
What shoppers now want is an offering that reflect the uniqueness of the place, the local communities, local products too. Innovative and imaginative community-focused spaces, with Independent retailers offering products that have provenance and linked to local heritage and culture.
A recent Enterprise Nation poll indicated that one in three shoppers planned to spend more at local independent stores and that rose to half of those aged under 35.
Given working from home is going to continue for many I believe this this change in shopping habit is likely to be long term and probably permanent.
The third unknown is whether the uncertainty and anxiety of the past year will continue even as things such as the opening of ‘non-essential’ retail start to move back to ‘normal’. Consumer confidence is key to the future health of retail and I’m just not sure that this is clear at present.
Many households have clearly accrued savings over the past year because of cancelled holidays, meals out, entertainment gyms and other discretionary expenditure (the OBR estimate this could be as high as £180bn) and as a result there have been predictions of a post-Covid ‘spending boom’ (or a 21st Century equivalent of the ‘roaring twenties’)
However, there are also understandable fears about an unequal ‘bounce back’ because lots of consumers financial position has weakened over this same period because of unemployment and for many others, their future job security had reduced with possible unemployment in the second half of 2021 when the various Government furlough and business support schemes will inevitably end.