14 September 2020, 08:46 AM
  • The MSCI’s UK retail index has outperformed the country’s benchmark for the FTSE 100, showing the potential in the online retail sector post-lockdown
UK’s online retail sector continues to grow as sales and shares surge

It’s no secret that the online retail sector has boomed since lockdown. With people unwilling or unable to visit stores in person, it led to a swift move to online shopping. It seems the benefits are still being felt, with retailers’ sales and share prices receiving a welcome boost, even as high street footfall remains below pre-pandemic levels.

When the UK went into enforced lockdown back in March, it led to the closure of non-essential stores, dealing a near-fatal blow to the country’s half-a-trillion dollar retail industry. Yet as one in 10 stores remain empty, major online retailers have witnessed a boom, helping the MSCI’s UK retail index outperform the country’s benchmark FTSE 100 by nearly 20%.

Food, glorious food
It’s perhaps unsurprising that some of the top performers in the MSCI UK index are online grocery shops such as Ocado Group. With people staying at home, consumers have been eating out less, and cooking from scratch more.

While being allowed to remain open, food retailers were perhaps the least impacted, yet fears surrounding the spread of coronavirus loomed and in-store footfall dwindled. Yet many indie food retailers swiftly adapted to meet new consumer habits, setting up an online shop to increase sales, offering click-and-collect or home delivery services and even expanding their product ranges to cater to demand for essential items like toilet roll, flour and bread.

While many consumers were using this time to support local, independent retailers, the multiples took action as well. But as supermarket loyalty faltered, it seems that the strength of the multiples’ online offerings were the key determining factor in how they fared on the index. Ocado shares have gone up around 120% since the start of March, whilst Tesco’s has dropped by 4% and Sainsbury’s by 10%.

It’s great news for the independent sector, particularly as trends for supporting local businesses and focusing on provenance continue post-lockdown. It goes to show the power of consumer habits, too. Between March and May 2020, the proportion of UK food sales made online jumped to 11.3%, doubling in just a few months.

It’s prompted Tesco to up its hiring game to cope with the growth, while independent retailers will no doubt also be aware of the increasing potential of online sales – and it seems this trend is going nowhere anytime soon. While online shopping for non-food products has begun to decline since May, online grocery shopping remains high, and it’s a key indicator of what’s to come.

“The pandemic has digitised whole new sections of the population,” said Clive Black, retail analyst at Shore Capital. “Online is here to stay.”

Want to learn more about how you can tap into your business’ online potential? Download our Ultimate Guide To Online Retail for free, and gain access to valuable knowledge and guidance from industry insiders to help you grow your online sales.

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