8 November 2021/ rent_retail_guide

How the pandemic changed retail forever

Panic buying. Tightened purse strings. Overstretched delivery services.

The pandemic forced the retail world into chaos overnight. Whether in the grocery, clothing, electronics, homewares, sports equipment or leisure subsector, every business in the retail industry was hit with a change in demand, supply chain shocks, and completely altered customer expectations. And we mean overnight.

The last 18 months or so have been a worrying time for retail. According to the ONS, 2020 saw total retail sales volumes fall by 1.9% from 2019, which represented the biggest annual drop ever recorded. But come April 2021, the picture was starting to turn. April 2021 saw a sharp increase of retail sales volumes, with a monthly rise of 9.2%. Britain was ready to shop again, but was the retail experience ever going to be the same again?

Supermarket or local greengrocer?

At the height of the pandemic, the supermarket shop became a worrying part of the week for lots of people – it was a chance to pick up the virus. With masks and hand sanitiser on, and every effort made to avoid others, the browsing enjoyment had been zapped out of the supermarket shop.

Not only that, but downward pressure on supply chains – coupled with panic buying – meant that supermarket shelves weren’t well stocked. Understandably, lots of Brits explored other avenues. In April 2020, Google searches for “local food” and “food delivery” skyrocketed. Faced with unprecedented demand, UK veg box suppliers like Riverford and Farmdrop had to introduce waiting lists for new customers.

A question mark now hovers over whether customers who switched from supermarket to local shopping will continue to favour producers closer to home. By shopping with local producers, consumers can cut the airmiles of their food and other goods to reduce their carbon footprint. They can also support their local economy, and may be introduced to new ingredients and ideas that they may not have tried before. There could now be a wave of new entrepreneurs who want to tap into the keen market for local goods.

Contactless becomes the norm

Is the UK edging ever closer to becoming a cashless society? The pandemic could have pushed us even further along.

To reduce the number of touchpoints between customers, retailers encouraged people to pay by contactless wherever possible – and it worked. In May 2020, 65% of purchases made by card were contactless. That month saw double the number of contactless payments compared to the same month in 2019.

There are already signs that the rising popularity of contactless payments is set to continue. The limit has been raised from £45 to £100, making it even easier to tap to pay.

Smaller retailers can also make the most of the technology, thanks to the availability of new machines on the market. There’s iZettle, Square and SumUp air, for example, all of which offer an affordable and straightforward way to take card payments. And, with competition in the market, there’s every chance that contactless systems will become even more sophisticated and reasonably priced.

The rise of online shopping

Long before the pandemic hit, online shopping was making an impact on the high street. Now, the balance appears to have tipped firmly in favour of ecommerce. May 2020 saw online sales rise to 33.9% of all retail spending – a record peak. Although the share has slightly dropped since physical shops have reopened, it is still higher than it was pre-pandemic.

Many retailers have taken the hint. Big names, including Topshop, have switched to being completely online.

But it’s not just home deliveries that have enjoyed a boost – click-and-collect has also increased and is expected to rise by 26% in popularity post-pandemic. With smaller – or even zero – delivery fees and the flexibility to collect when it suits you, this kind of online shopping is convenient and cost-effective. It also has benefits for the retailers. Evidence suggests that 35% of shoppers who use click-and-collect services will buy something when they come into the store to pick up their item. Here is an opportunity for retailers to upsell, perhaps with a clever shop layout that encourages browsing for a few extra items.

Shopping becomes an experience

A day out at the shops isn’t new, but the experience may soon change. When the shops reopened in June 2021, high street footfall was still down by nearly 60% from 2019 levels. Shops need to do more than open their doors to tempt people back in. And with online shopping offering convenience, physical shops need to offer more than the chance to browse.

Many brands have been enhancing their in-store experience for some time. Nike, for example, has trialled House of Innovation stores in New York and Shanghai that offer an immersive experience, along with opportunities for customers to personalise products. Canada Goose, on the other hand, has specialist cold rooms where temperatures drop as far as -27 degrees – the coldest that most people will ever experience – so that people can experience the warming benefits of the coats in action.

Careful spenders

Sadly, the pandemic has meant that many people have less disposable income than they once had. With wallets squeezed and ongoing uncertainty, 31% of UK consumers have said that the value of a product and their budget are more important to them than they were pre-pandemic. People want to make sure that every penny goes further, whether this means buying quality goods that will last a longer time, or buying cheaper items that suit their budget.

The retail experience could adapt to better communicate value. This could involve more information that highlights the enduring benefits of products, there could be designated rails housing more affordable items, or retailers could use displays to show the many uses of a product.

Capitalising on new opportunities

Although the retail sector has taken a knock during the pandemic, there will – of course – be winners and losers. Many local shops and producers have enjoyed an uplift in sales, as have businesses selling at-home activities, sports equipment, loungewear, technology and even cookware.

Whenever there is a turning point for change, entrepreneurs will use the moment to find a niche that grips the market. If you are looking to bring a new experience to the high street, browse the shops & retail properties currently available on Realla to find the space that will bring your idea to life.