The future of retail could become quite different as many sectors, such as hospitality, travel and entertainment, have been hit hard with financial losses this year due to the impact of government restrictions and social distancing on their services.
The UK retail sector has been deeply affected by COVID-19, particularly with the closure of non-essential shops throughout the pandemic.
The detrimental impact of the pandemic on the sector could have potentially long-term implications for the future, especially as shoppers become used to their new online habits. But does the shift to the digital world truly mark the end for the British high street?
The Struggle to Keep Up
This year has seen unprecedented levels of redundancies by retailers as the pandemic has forced restructuring and cost-saving programmes throughout the sector and, in many cases, household names have been pushed into administration, making uncertain the future of retail.
Tens of thousands of employees at Debenhams, Arcadia Group stores, Frasers, M&S and John Lewis – to name a few – have lost jobs or are facing redundancy.
Those shops with no online presence inevitably struggled during both national lockdowns as only those businesses deemed ‘non-essential’ could continue trading. For example, high-street giant Primark went from monthly sales of £650 million to zero during May-June.
In March, some high street stores such as Next and River Island temporarily closed their websites to online sales as they decided to close distribution centres for the safety of their staff.
But it was a move that brought such stores great financial loss. During the first nationwide lockdown, online shopping as a proportion of all retail reached a record high of 30 per cent, according to ONS data.
The Great Digital Shift
Whilst some high street stores struggled throughout lockdown, those retailers who were already well-equipped for online sales thrived.
Online retailer Amazon reaped huge profits during the pandemic. The retailer created a total of 10,000 permanent jobs as well as 20,000 seasonal posts nationwide.
Tesco created 16,000 permanent jobs after the first nationwide lockdown led to an “exceptional growth” in online sales.
Delivery firm DPD recruited 3,500 drivers and 2,500 support staff, such as mechanics and parcel sorters.
A Blended Approach
But, as employment opportunities shift from high street stores to warehouse and support staff, will the future of retail be solely online?
Unsaid spoke to UK Retail Expert and lecturer in International Business and Management, Dr. Phil Smith, who believes that the high street still very much has its place in society. He said:
“Here we are with the sudden unprecedented restrictions of this pandemic; some already failing retailers will not survive, consumers are using online more than ever but seemingly miss their visits to the shops during lockdown measures.
While we cannot generalise about a fix for our high streets, occupiers need to embrace a blended approach to serving their target consumer audience on the high street and virtually – engaging local communities on social media.
Perhaps the pandemic will be the final push that was needed to remind us of the value of a thriving high street to our local community.”
Future of retail: Changing Habits
Almost half of UK shoppers believe the pandemic will have a permanent effect on their shopping habits, according to research by O2 Business and Retail Economics.
The survey showed that 47 per cent of shoppers think that the number of times they shop online will definitely increase.
A large proportion of survey respondents said that they had used retailer websites whilst in that particular retailer’s store.
About 24 per cent said they have purchased items online whilst in a retail store and a further 36.5 per cent said they have used to looked at reviews and price-checked online on their mobile while out shopping.
Retail Economics CEO Richard Lim said:
“We’ve already witnessed a significant shift towards online and it’s inevitable that some of these behaviours will become permanent, with digital playing a much more important role.
Many of these consumers are shopping for goods online for the first time, overcoming the barriers of setting up online accounts, entering payment details and gaining trust.”
Unsaid spoke to Maggie, a retired teacher from South Lanarkshire, who said that her shopping habits have changed significantly since before lockdown began in March.
“I had never used online shopping before. I was a bit scared of putting my bank details in online to be honest. But when we went into lockdown in March, I was in a high-risk category and it was too dangerous for me to go to the shops to do my food shopping.
I started getting supermarket deliveries to the house and realised just how easy it is to do. I think once we get back to normal, I’ll probably continue getting my food deliveries each week and just get some top-up shops as and when I need to.”
Sarah, a 21-year-old law student from Sussex, says that the pandemic has encouraged her to reconsider how much she spends on clothing but adds that she thinks young people will continue to shop in-store as well as online.
“I used to buy new clothes for every occasion and, as much as I miss dressing up for nights out, I think that was a bit silly really. I’ve hardly bought any new clothes since March and my bank balance is thanking me!
But, it does sadden me that so many shops on the high street have closed. I think young people like to do some shopping online and some in-store. Going shopping is something fun to do with your friends (when things go back to normal, of course!) and I think businesses should be considering a 50/50 online and offline approach.”
It is clear that the pandemic has brought an evitable change in shopping habits as consumer preference shifts even further towards online purchases.
A blended approach, encouraging shoppers to use both online services and shop in-store, might well be the future of retail but, as the pandemic continues to leave behind a trail of closed shops, what exactly is in store for the high street of 2021 and beyond remain uncertain.