How COVID-19 is Impacting the Retail Industry

How COVID-19 is Impacting the Retail Industry

The almost global shutdown in response to the coronavirus pandemic is impacting the retail industry in ways we could never have imagined. Even before the pandemic, many retailers were under severe pressure, which has meant many businesses in the sector have already or are on the brink of collapse. Furthermore, many thousands of workers are on furlough and dependent on support from their national governments.

According to the British Retail Consortium, hundreds of thousands of jobs in the sector are at risk. In the first two weeks of the UK lockdown, retails sales plunged by 27 percent, even though sales surged by 12 percent as shoppers stocked up ahead of restrictions being imposed. Similar pictures are emerging across Europe and in the US.

That said, many retailers have used this situation to transform their business, diversify their offerings, differentiated their business model and are now thriving thanks to their quick-thinking and spotting gaps in the market and buying trends.

So, with this incredible polarisation, what’s happening across the different retail sectors?

Food sector

Early in the crisis, supermarket chains across the world experienced a mad rush of panic buying so severe that it created a black market in items such as toilet rolls and hand sanitisers. While shoppers were faced with empty shelves, some supermarkets saw up to a 50 percent uplift in sales. Over the first two weeks in March, however, there was a sudden reversal. While some shortages continue, sales fell over that period by as much as 10 percent compared to the similar pre-Easter period in 2019.

To a large extent, this has been exacerbated by social distancing and shoppers switching to local shops to avoid the queues outside supermarkets. Consequently, many independent retailers and local producers have reaped the rewards.

Online food sales have also skyrocketed to the extent that it is tough for UK shoppers to book a delivery slot. Many supermarkets prioritise slot availability for elderly and vulnerable customers, though even these prioritised customers find it difficult to secure a slot.

Before the pandemic, much of continental Europe was unused to online food shopping. Food markets and stores were preferred. But since coronavirus people have turned in their droves to food shopping online. In France, online orders rose by a third and click-and-collect sales by a quarter. In Italy and Spain, the number of online customers more than doubled.  Similar increases were seen in the US.

To cope with the demand, a huge number of employees have been taken on. The major UK supermarkets have between them hired 64,000 extra staff. As a result, this is great news for smaller, independent retailers and increasing employment levels – vital for stimulating the economy.

Fashion industry

Sadly, many of the headlines indicate that the fashion industry is faring badly; indeed, the coronavirus threatens its future should store closures extend for two months or more.

Globally, 2020 fashion sales are likely to fall by 30 to 40 percent with the luxury end being hit the hardest. Two months closure threatens listed fashion companies in the US and Europe with “financial distress”, and stock values are falling faster than the overall stock market. The sector, worth $2.5 trillion, has lost 40 percent of its share value since the start of the year.  Many global fashion businesses are expected to become bankrupt over the next twelve months.

The knock-on effect is massive. Globally, around 300 million people work in the sector. Many retail jobs have been lost, and many more are under threat. Orders for new season stock have been cancelled, and garment workers in countries such as India, Bangladesh, Pakistan, Vietnam, Sri Lanka, and Cambodia are out of work threatening the livelihoods of millions of workers.

In some cases, fashion warehouses are also overflowing. In the UK alone high street fashion goods valued at £10 billion have piled up as shops are no longer able to accept deliveries through lack of space.

That said, some fashion retailers are thriving through their strategic approaches.

For example, many fashion houses and designers are better utilising technology to promote their clothing to audiences at home. For example, there has been a growth in clothing videos and 360-degree ‘look books’ so that fashion buyers can fully see and experience a product before buying. This has worked wonders for the designer, Steven Tai, who says that half of the orders placed are due to his new virtual look book.

Some fashion retailers have also seen a sales boom as they promote comfy loungewear and sports clothing over ‘going out’ garments. For example, online retailer Boohoo has reported a significant sales growth with buyers opting for ‘Zoom-ready’ smart tops and relaxed homewear.

Fashion supply chains are also diversifying and improving by digitising their software to create responsive production that is based on demand and supply. There is also a rise in made-to-order fashion which is enticing to fashion brands, especially as made-to-order items see a much lower return rate from consumers. Typically, the return rate can be between 5-7% – this is especially enticing to brands that struggle with the expenses of reverse logistics.


Unsurprisingly, global eCommerce sales are being driven by the closure of physical retail outlets for goods, services and entertainment. Many millions of people are now regularly shopping online. While online fashion sales have seen a small decline, during March transactions volumes grew on average by 74 percent with areas such as online gaming, home products and furnishing almost doubling and gardening essentials increasing by over 160 percent.

For retailers who are able to move and market their business online, now has been a time to maximise sales.

Retailers are innovating to help customers through the crisis

Many retailers worldwide are coming up with innovative solutions to help their customers survive and cope with the crisis. Just some examples include:

  • Repurposing manufacturing facilities to produce health products – Perfume manufacturers, breweries, distilleries, and fashion houses are repurposing their production lines to manufacture desperately needed personal protective equipment products such as hand sanitisers and face masks. In many instances, these are being provided free of charge.
  • Special help for vulnerable people – Supermarkets are providing priority store access and online shopping priority delivery slots for elderly and vulnerable shoppers.
  • Several supermarkets are providing “essential” food boxes to people who are unable to reserve delivery slots. They are also donating unprecedented amounts of goods to food banks.
  • Social distancing delivery methods – food and other deliveries are now left at people’s front doors rather than handed over in person.
  • Community building – many retailers are encouraging their customers to engage with each other in quizzes, exercise routines, virtual meetings with celebrities, cooking classes, book groups and more.
  • Some leading retailers have set up drive-through COVID-19 test centres for health workers, and others are donating significant sums to charities that are helping people affected by the crisis.

The future

Eventually, the world will return to normal, or something approximating to normal. Our behaviours will revert gradually to how they were before the virus struck. We will visit pubs, eat in restaurants, attend events, and go shopping on what remains of the high street.

But it won’t be precisely the same. Many people previously unaccustomed to digital sales will have discovered they prefer that way of shopping and will continue to shop online. Other shoppers, however, will fully embrace the chance to revisit the shops. For example, many shoppers will want to continue supporting the local, independent retailers who came through during lockdown when supermarkets struggled.

As always, competition amongst retailers will be fierce, as they vie to retain old and attract new customers. Even those that weather the COVID-19 storm might not survive its aftermath without adapting their strategy. Some will continue, and others will disappear. We will see the more creative retail businesses introduce innovations and digitisations that boost their brands and drive sales.

Consequently, there will be a significant demand for talented staff who can help lead the sector through its resurgence and carve out the new path for the future of the business.

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