Opinion: The return of retail

UK retailers can resume instore trading on June 15, and it is badly needed. Data for April shows that sales volumes have fallen off a cliff since lockdown began. There is a mountain of social distancing guidance to climb, but businesses need to reopen if the high street is to survive this crisis. Richard Dawson looks ahead to a critical month for retail

News that non-essential retailers will be able to reopen from June 15 has been met with both relief and trepidation by businesses who have been largely unable to trade since March 23.

The sector is of course desperate to get back to business after suffering its worst month on record in April.

But many retailers will be wondering how they can maintain social distancing, protect staff, increase hygiene standards and do all of the above without deterring the masses of customers that they’re going to need to remain financially viable.

At a time when operators need Christmas-level footfall to shore-up balance sheets that have been mortally weakened by this crisis, they’re going to have regulate and perhaps even turn away customers to be compliant with the rules.

June is going to be a critical month for retail – it may even seal the fate of the UK high street as we know it.

The latest figures show that retail sales volumes fell in April by 18.1 per cent month-on-month and 22.6 per cent year-on-year, the largest such deterioration on record as the full weight of lockdown restrictions was felt across the sector.

Even food sales, which have rocketed since February when people concerned about supply chains failing began stockpiling household essentials, experienced a 4.1 per cent decline.

While buoyant online sales could not stave off the collapse, online retailers did increase their market share, jumping to 30.7 per cent of total sales in April, up from 19.1 per cent a year ago.

This is the real long-term challenge for the high street. If those with bricks and mortars stores were already struggling to remain competitive when online sales made up just a fifth of total sales, then how will they fare if this rises to one third post-coronavirus?

Non-essential retailers are also going to have to work out how to become ‘COVID-secure’ before being allowed to trade again, which will be easier for some than others.

The Government guidelines includes things like limiting customer numbers in stores, introducing one-way systems, encouraging customers to use hand sanitiser and to avoid handling products while browsing.

It also suggests closing fitting rooms wherever possible, implementing contactless purchases and returns, storing items that have been touched by customers for 72 hours and frequently cleaning all surfaces and high-touch areas.

Given that we know most people choose to shop instore instead of online for the retail experience, it’s difficult to see how these measures will be enjoyable for shoppers.

The last piece of this increasingly complicated retail puzzle is the one that’s most difficult to predict – what will happen to consumer spending patterns in the midst of the most uncertain economic situation in our lifetimes?

How much discretionary spending will people allow themselves if they’ve been furloughed or are about to be?

How much of an effect will discounting have on both spending behaviour and business bottom lines?

How will households spend some of the savings they’ve accrued during lockdown?

Retailers big and small will be eager to find answers to these questions. But it’s difficult to know what’s going to happen until shops begin to reopen. Like many aspects of life under coronavirus, it’s going to be a case of wait and see.

What’s critical is that physical businesses do make a concerted effort to resume trading, no matter how big the barriers to doing so may be.

Failure to act now would leave the door wide open for online businesses to take even more market share and finish off the high street for good.

The atmosphere in the digital economy is positively bullish, as the pandemic has strengthened the case for doing more things online.

But there is one thing that high streets have that cannot be replicated online and that is a sense of place and community – somewhere to enjoy a day out with family or a night out with friends.

This is something that surely must endure.