The UK may have started lifting minimal restrictions on its nationwide lockdown this week, but there are growing signs that the coronavirus pandemic could impose a more permanent change on retailers.
According to the latest data collected on April 18-19 from global consulting firm McKinsey & Company, a quarter of consumers surveyed in the UK believe that Covid-19 will cause the economy to fall into a long-lasting recession. As such, 36 per cent of consumers were cutting back on spending, with a further 36 per cent saying uncertainty was preventing them from making purchases they would normally make.
Generally, European consumers are much less optimistic – with the exception being Germany where 24 per cent expect the economy to bounce back within two to three months.
As of May, Europe continues to be the epicentre of Covid-19 and the UK has the second highest coronavirus death toll in the world. However, since the start of the month some European countries – including Italy and Spain which were both regional epicentres before the UK – retailers have started to slowly reopen as the number of daily coronavirus cases drops.
On Sunday night, UK Prime Minister Boris Johnson said that some shops may reopen from June 1 as part of a phased easing of lockdown measures. However, the reopenings depended on the rate of Covid-19 infections – or the R rate – staying below current levels.
Experts told Retail Gazette that retail would never return to normal, and the industry would need to adjust to a “new normal”. Yet as British retailers await government permission to re-open, the question arises as to whether they should observe store re-openings among their European neighbours to better prepare. Chancellor Rishi Sunak was already doing this at least, amid reports he was “studying” Czech Republic’s back-to-business strategy when shops were re-opening in late April.
Nick Hoenig, retail consultant from consultancy firn Capgemini, said that while there are differences in rule specifics such as Austrians required to wear masks in stores and the Spanish are not, some learnings won’t be directly applicable to the UK. However, he highlighted that the broad themes of social distancing and strict hygiene are near universal.
“Each market is incredibly nuanced and needs to be treated differently”
“This gives UK retailers the opportunity to understand how retailers are adapting their shopfloors, services and operations to support customers and staff,” Hoenig said.
“For many, this will be natural – major brands here such as Tesco, Aldi, Lidl, Primark, Superdry and B&Q have major European presences, and will be well versed in sharing learnings internally across borders, and understanding the limitations in what can be read into these.
“Even for those without a European business, they can learn from those that do, and understand what resonates with customers.”
Laila Hede Jensen, chief commercial officer at communications business Zeta Display, told Retail Gazette that the UK was in a “great position” to learn from European neighbours.
“Many of them are up to a month ahead in their retail strategies with a variety of approaches emerging, utilising technology, signage and business process to make their environments safer,” she said.
“By watching and learning from innovations, winning strategies and mistakes on the continent, UK retailers can help keep their customers safer and give them confidence to go back to retail after a prolonged period at home.”
However, Elliott Jacobs, consulting director at commerce agency LiveArea, said returning to business would not be as simple as watching the rest of Europe.
“Each market is incredibly nuanced and needs to be treated differently,” he said.
“The UK, for instance, has the largest ecommerce industry in Europe and the third largest in the world.
“It is fundamentally a more digital market than others in the EU, meaning expectations will differ greatly.
“The pandemic has underlined the importance of an effective digital presence, a trend which will continue in its wake, with physical shops unlikely to ever return in their former guise.”
Jacobs added that rather than focus too heavily on retailers in other nations, businesses should instead focus on the digitally-native brands that have captured the market, such as Boohoo, Asos or Untuckit.
“This means prioritising efficient delivery services and effective communication to cater for the new breed of consumer,” he said.
“Traditional commerce providers won’t be able to shift to digital overnight, but pandemic has proven its importance. The lessons to be learnt are clear, speed and decisiveness are now the key.”
Andre Hordagoda, chief executive of software firm Go Instore, agreed. He said that during the lockdown, customers have adjusted to shopping online and to new technologies, and they need to continue to have the option to have retail experiences online post Covid-19.
“New ways of shopping are essential to enable retailers to continue to trade as normal, both within lockdown and the gradual reopening of stores,” he told Retail Gazette.
“Retail hasn’t just changed for the short-term, it has changed forever.”
Jensen argued that the UK is already learning lessons from Europe, such as controlling crowds outside stores as well as inside them, queue management, and contactless payments.
“QR codes becoming a regular way of consuming product information across Europe, and ordering for delivery later on,” she said.
Although the UK’s retail sector can still use experiences from retailers in Europe to forecast and understand overall buying trends once the lockdown is fully lifted, the noticeable surge in “revenge spending” across the Far East cannot be guaranteed for Britain.