Deserted stores, less choice … has shopping changed for ever?
After nearly two years of disruption, Covid-19 has changed how we shop for ever. It has altered not only what we buy, but how we buy it. Big purchases involve clicks, not shopping trips, and remote working has turned the home interiors market into the new fast fashion.
It has also signalled the end of overwhelming choice for consumers, analysts say, as gaps on shelves and long delivery times for items such as cars and sofas become a frustrating fact of life.
Lifestyle changes due to health or environmental concerns are also helping new services get off the ground. Investors are pouring billions into rapid grocery delivery, while buying secondhand clothes and renting furniture is entering the mainstream. On high streets, cheaper rents are starting to attract independent stores.
Here is a look at some of the big changes taking place.
Grocery shopping
The pandemic has caused major upheaval in the UK’s £212bn grocery industry. The return of the weekly shop during the strictest periods of lockdown looked as though it had saved the big supermarkets from a midlife crisis, only for an army of rapid grocery delivery firms, such as Getir, Gorillas and Jiffy, to emerge with the promise of delivering your groceries in less than half an hour.
The IGD, the trade body for the food and consumer goods industry, says this so-called quick commerce has “exploded” on to the scene and is now a “channel in its own right”. It estimates 13% of UK shoppers now use these services, with sales hitting £1.4bn this year and on track to double within five.
Bryan Roberts, an analyst at Shopfloor Insights, says the health crisis has created the kind of market conditions where people are “willing to pay a delivery fee for a 20-quid, 15-minute, delivery experience”, although he adds: “Time will tell if these models are going to be sustainable.”
The expanded online services offered by the big chains have also won millions of new customers during the pandemic, but with inflation running at a 10-year high, the sands are shifting again, with discounters such as Aldi and Lidl the likely winners in the coming months as Britons seek out cheaper stores.
There may be more ways to shop these days, but the supply chain problems in the background have prompted the major grocery brands to take a leaf out the discounters’ book and reduce their ranges to become more efficient.
Richard Wilding, professor of supply chain strategy at Cranfield School of Management, says that the “abundance of choice we’ve had is going to change”.
“You used to be able to buy 60 different types of pasta in the supermarket: then, during the pandemic, manufacturers started rationalising their ranges so all of a sudden you could only get 20 types,” he says. “Having new and interesting products has traditionally been a way of creating consumer demand, but companies are basically saying ‘we’ve got to focus on the higher-margin things’.”
Working from home
The shift to home working has had such a profound impact on how we live that it has become a retail super-trend in its own right. It has altered spending priorities, as money usually spent on foreign holidays or commuting is ploughed into home furnishings and revamps.
Being home 24/7 has also resulted in an acceleration of the shift to online shopping. It took eight years for online sales to double their share of spending to 20%, but within just nine months during the pandemic, that figure touched 36% last year. This year’s easing of restrictions saw it fall back to a still substantial 26%.
“Working from home has changed both the pattern of shopping and the pattern of demand,” says Richard Hyman, an independent retail analyst. “The shape of markets like fashion, food, beauty and homewares have changed, but the question is: have they alighted on a new, permanent position? It’s still very fluid because no one knows what proportion of people are going to continue working from home.”
The profile of consumer spending has changed dramatically: for example, shoppers have spent an extra £503m in DIY stores this year, according to figures from retail data firm Kantar. Britons also took up new pastimes: 1.2 million new gardeners spent an extra £51m on plants and related paraphernalia.
“Not everybody’s job is home-based but generally the way we are socialising and shopping is much more centred around the home,” says Joanna Parman at Kantar.
“We are travelling less far at the weekend for shopping trips or to eat out. So we’re much more likely to be visiting local or independent stores than before.”
She adds: “Lots of people are divested in how they look and invested in how their home looks so it is Instagrammable and is looking nice in the background when you’re on your phone or video call. They are investing a lot more in their homes and you could argue we are seeing some ‘fast homewares’ trends coming through.”
Fashion
Britons have swapped style for comfort during the pandemic: witness the 88% increase in loungewear sales last year. The closure of high street stores for long periods forced shoppers to buy the clothes they needed online and there may be no going back.
The data firm Retail Economics estimates that half of the £51bn spent on clothing this year will have been bought on websites. Come 2025 it thinks that figure will be two-thirds of the total. This is already the case for electricals, which has been one of the fastest markets to move online.
“What’s clear from the pandemic
is that we as a nation have been able to adapt and shift our behaviours, sometimes overnight,” says Parman. “There’s not a lot of policy saying we shouldn’t socialise but people have already stepped back from eating out. We drive a lot of the change in our habits and the longer they are in place, the more likely they are to stick.”
There are other big forces at work in this market too. The fashion industry is a big polluter and under growing pressure to get itself on a more sustainable footing, so more companies are experimenting with selling secondhand clothes or even renting them out, a model that has previously focused on outfits for special occasions.
The UK’s biggest clothing retailer, Marks & Spencer, is running a small trial to test demand for renting its dresses and coats – a trend that is more advanced in furniture, where the likes of John Lewis are renting out sofas, sideboards and desks.
As always, fashion-conscious teens got there first and are already spending their cash on secondhand clothes sites such as Depop and Vinted, which are reporting big sales increases. Parman thinks the clothing rental market is a “trickier” model but predicts the preloved fashion market will take off even more in 2022.
Cars
The secondhand boom has already arrived in the car market, where soaring used car prices, up 31% since April, are stoking inflation. Usually about 2.5 million new cars a year are registered in the UK but that number sank to 1.6 million in 2020 with a similar figure expected this year as a shortage of computer chips hits production. This shortfall is one of the factors pushing up secondhand prices.
Ian Plummer, commercial director of the Auto Trader marketplace, says Covid has forced a reluctant industry to embrace the web. Buyers want to be able to do more of the legwork online, from getting a valuation for their current car to applying for finance. However, given the cost involved – in expenditure terms, a car is second only to a home for the average household – “seeing, touching, smelling” your chosen vehicle remains an important final step.
There has been some upside to the tumult, with the most recent figures showing a doubling of sales of electric vehicles. Almost 22,000 pure electric vehicles were registered in November, more than double the figure in the same month of 2020.
“A new electric vehicle launched every 10 days in the course of 2021 and there are even more cars coming next year,” says Plummer. “It’s a big shift in the market: more supply, more marketing, creating more excitement, which has been spurred on by the fuel crisis.”
Stores
The rapid spread of the Omicron variant has been devastating news for store-based retailers as shopper numbers tail off on what are among the most important trading days of the year in the run-up to Christmas. With the Covid crisis seemingly far from over, the jury remains out on what the longterm consequences will be for the high street.
The stream of household names that failed pre-Covid was accelerated by the lockdowns. Recent British Retail Consortium data shows the number of empty stores sitting at a record high of 14.5%.
The crisis has pulled down rents but eye-watering business rates remain a big problem that the government seems reluctant to deal with. There are glimmers of hope, though, with the same data pointing to a declining vacancy rate in some regions, as independents move in to fill the spaces left by defunct chain stores.
But there is, without question, more painful change to come. Hyman points to the £90bn of non-food sales that have moved online over the past 20 years, a period when there has been no “meaningful” reduction in store space.
“The cost of selling something in a shop is now much more expensive because you’ve got a high fixed cost base and lower sales,” he says. “When all this is over, we are still going to have too many shops and too many websites.”