As retail sales recover, what does the future hold for the sector?

Two months on from the reopening of Britain’s retail sector, the industry has started to show green shoots of a recovery, but many retailers are still trying to make up for lost ground during the lockdown.

According to the latest data from the British Retail Consortium, sales on a like-for-like basis increased by 4.3% in July, compared with an increase of 0.3% in 2019, as demand gradually returned. The rise marks the second consecutive month of growth since the beginning of the Covid-19 pandemic.

This trend was especially pronounced for the food sector, where sales over the three months to July increased 8.2%, the highest since June 2009.

Despite the rise, many shops have continued to struggle as footfall remains down and shoppers make fewer impulse purchases. “While the rise in retail sales is a step in the right direction, the industry is still trying to catch up lost ground, with most shops having suffered months of closures,” says Helen Dickinson, chief executive of the BRC.

Even though lockdown restrictions have eased and many consumers’ daily lives have started to return to some form of normality, shoppers are still focused on life at home, says Paul Martin, UK head of retail at KPMG.

September will be the real test for retailers, Paul says, but he adds that thanks to the current economic situation, consumer confidence is in a fragile position: “[With] the furlough scheme unwinding and wider economic uncertainty set for the autumn, consumer anxiety will likely rise along with it. This will place more scrutiny on disposable income and make life even tougher for retailers.”

Susan Barratt, CEO at IGD, adds that shopper confidence, which is stable at the moment – albeit with regional variations due to local lockdowns – will be in the spotlight for the next year at least: “[The] economic impact of Covid-19 will be felt on shopper confidence going forward and retailers should prepare for increased focus on savvy shopping for the remainder of the year at least.”

So what do retailers need to do to find success in this new environment? ‘Innovate’ is the buzzword of the moment, and independents in particular can take advantage of the flexibility of their operations to adapt to new trends and help restore confidence.

“In order to survive and thrive long term in this new era of retail, retailers must accept that the landscape has completely changed, and hygiene is only one of the concerns,” says Will Broome, Founder and CEO of retail tech company Ubamarket. “Companies that are reluctant to transform their operations and reposition their resources will find it difficult to survive.”

The new shopping experience should address customers’ concerns around convenience, personalisation and ease of use – all areas where farm shops and delis are well-positioned to thrive. This will include diversifying sales channels to include online options for the long-term, as well as revolutionising the in-store experience to offer an experiential shopping environment for customers.