Shop­pers stay close to home as re­tail­ers fight cri­sis

In the fourth part of a series on how Covid-19 has up­ended the world, Rhi­an­non Curry ex­am­ines the im­pact on the high street

The Daily Telegraph - Business - - Business -

‘Rather than shop­ping while they are at work, peo­ple have now re­alised that there is quite a good lo­cal shop’

When the Bri­tish Re­tail Con­sor­tium lamented in Jan­uary that 2019 had been the worst year for re­tail in 25 years, it could have had lit­tle idea what the fol­low­ing few months would hold. High streets quickly be­came one of the ma­jor ca­su­al­ties of the virus lock­down, and the roll call of trou­bled busi­nesses as the UK emerges blink­ing into the au­tumn reads like a list of the great and the good of Bri­tish re­tail­ing: Marks & Spencer, Deben­hams, Mon­soon Ac­ces­sorize, John Lewis and Laura Ash­ley are just some of the brands bruised by the last few months.

While shops were al­lowed to re­open in mid-June, con­sumers have been hes­i­tant to re­turn en masse, al­though foot­fall is be­gin­ning to im­prove.

Fig­ures re­leased by Spring­board showed shop­per num­bers across all UK re­tail des­ti­na­tions rose by 4.1pc last week – al­though num­bers re­main more than 30pc lower than last year.

As he re­vealed plans for a re­struc­ture, Steve Rowe, M&S boss, warned some shop­per habits had been “changed for­ever” by the pan­demic.

There have been two fun­da­men­tal shifts, ex­plains Kien Tan, se­nior re­tail ad­viser at PwC: what we’re buy­ing and where we’re buy­ing it – and these changes are likely to stick for at least the next cou­ple of years.

Bri­tons were al­ready en­thu­si­as­tic about on­line shop­ping com­pared to their Euro­pean coun­ter­parts, but fig­ures from the Of­fice for Na­tional Statis­tics show a spike in in­ter­net re­tail­ing in May, when 32.8pc of all goods were bought on­line. The pre­vi­ous year, that fig­ure had been

‘It took us 10 years to get from 10pc to 20pc in­ter­net pen­e­tra­tion, and about two months to get from 20pc to 30pc’

18.8pc. “It took us 10 years to get from 10pc to 20pc in­ter­net pen­e­tra­tion, and about two months to get from 20pc to 30pc,” Tan says.

Putting aside gro­cery shop­ping, he says the most sur­pris­ing change is the speed at which the UK has em­braced buy­ing fash­ion on­line. It is a trend which ex­perts ex­pect to per­sist.

“Coro­n­avirus meant many peo­ple tried on­line shop­ping for the first time,” says Kyle Monk, di­rec­tor of in­sights at the BRC. “While some of these peo­ple are al­ready re­turn­ing to the high street since lock­down ended, oth­ers are likely to con­tinue with this new habit, giv­ing on­line shop­ping a per­ma­nent boost into the fu­ture.”

So is this move to on­line the end of Bri­tain as a na­tion of shop­keep­ers? Far from it, says Mat Oak­ley, head of Euro­pean re­search at Sav­ills, who sug­gests that the pan­demic has done lit­tle more than ac­cel­er­ate what was al­ready un­der way in the sec­tor. In fact, he pre­dicts in­de­pen­dent busi­nesses, which peo­ple came to rely on dur­ing the worst days of lock­down, could be a sur­pris­ing ben­e­fi­ciary.

“I think a lot of peo­ple have re­dis­cov­ered their lo­cal shops dur­ing the last few months,” he says. “Rather than shop­ping while they are at work, or get­ting in the car and trav­el­ling to their near­est large town, they have re­alised that there is quite a good lo­cal shop for some­thing.”

Ac­cord­ing to Global Data, al­most one in three Bri­tish con­sumers say they will visit lo­cal shops more fre­quently than they did be­fore the cri­sis. This, cou­pled with longer-term changes in how and where peo­ple work, could ben­e­fit smaller ur­ban hotspots and sub­ur­ban high streets, Oak­ley points out, but is likely to have a dev­as­tat­ing im­pact on des­ti­na­tion shop­ping ar­eas such as the West End.

White-col­lar work­ers in par­tic­u­lar are un­likely to re­turn to their pre­vi­ous pat­terns of spend­ing five days a week in an of­fice.

At the in­ter­sec­tion of greater use of on­line shop­ping and a de­sire to sup­port in­de­pen­dent busi­nesses are third-party op­er­a­tions such as Pinga.

The app en­ables users to re­quest items from shops, cafes or take­aways on their lo­cal high street and con­nects com­mu­nity mem­bers who can shop on their be­half and drop off on their doorstep.

Michael Goulden, one of Pinga’s co-founders, says he wants to of­fer a vi­able al­ter­na­tive to Ama­zon which ben­e­fits UK-based re­tail­ers. “We es­ti­mate at least 60pc of what you or­der from Ama­zon is avail­able in a shop two kilo­me­tres from where you live, through an in­de­pen­dent store or a big branded re­tailer, but you cur­rently don’t know whether it’s in stock or if they de­liver,” he says. The app al­lows cus­tomers to search for a prod­uct, lo­cate it in a lo­cal store, and pur­chase it for same-day de­liv­ery.

What Pinga em­braces is what Don Wil­liams, re­tail part­ner at KPMG, calls a “move to ease”: con­sumers in­creas­ingly want to shop when­ever and wher­ever they feel like it. “This is about how sim­ple it is to in­ter­act with the prod­uct,” he says. In or­der to sur­vive in a post-Covid world, re­tail­ers will need to im­prove their sup­ply chains, and fo­cus on build­ing an in­ti­mate knowl­edge of their cus­tomers, in­creas­ingly re­ly­ing on data anal­y­sis, he adds.

And if how we’re buy­ing goods has shifted, so has what we’re buy­ing: house­hold goods have al­ready seen a big re­cov­ery in sales as peo­ple spend more time in their homes.

Ac­cord­ingly, re­tail parks, which are home to a large num­ber of DIY and fur­ni­ture stores, have bounced back more quickly than high streets.

“Clearly, some re­tail­ers have been in dis­tress, but that is an ac­cel­er­a­tion of changes that were hap­pen­ing be­fore,” Tan adds.

That said, the spec­tre of rows of empty shops looms large. “There is al­ways some seg­ment ready to take up ex­cess space,” Oak­ley says con­fi­dently.

“In the late Nineties and early 2000s it was mo­bile phone shops. Af­ter the global fi­nan­cial cri­sis, it was cof­fee shops.”

One hun­dred coun­cils across the coun­try are cur­rently wait­ing to find out whether their bids for a share of £1bn of gov­ern­ment money ear­marked for strug­gling high streets via the Fu­ture High Streets Fund will be suc­cess­ful. A num­ber plan to use the money to fund events such as food mar­kets, street fes­ti­vals and live mu­sic in­tended to draw crowds back.

Roger Hawkins, found­ing part­ner of ar­chi­tects Hawkins\Brown, says it is these ini­tia­tives which could save high streets from be­com­ing eco­nomic waste­lands. “New, more re­silient uses will in­evitably start to take the place of vul­ner­a­ble ones, ac­cel­er­at­ing the tran­si­tion to­wards more ex­pe­ri­ence-ori­ented high streets, where leisure, cul­ture and em­ploy­ment uses play an in­creas­ingly im­por­tant role,” he ex­plains.

Tempt­ing peo­ple back to the high street may prove dif­fi­cult, but the re­tail sec­tor can achieve much by meet­ing con­sumers where they are – which for the next year at least, is likely to be mostly at home.

Brix­ton florist Janet Ed­wards is among shop own­ers who have wel­comed back cus­tomers

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