Today marks 100 days since retailers were allowed to reopen their stores following lockdown – and the retail landscape has changed dramatically. Retail Week analyses the key lessons retailers have learned since June 15

1. The resurgence of the big grocery shop

Supermarket social distance queue

One phenomenon that grew directly out of lockdown and has persisted since is the return of the once-a-week, big grocery shop. 

This change in customer behaviour was first noted by Kantar in its market grocery market share data in April. It showed that, as grocers began implementing social distancing measures inside supermarkets, customers were making less frequent visits to stores but basket sizes were increasing. 

“On average, households shopped only 14 times for groceries over the past month, a record low and down from 17 in more normal times,” noted Kantar head of retail and consumer insight Fraser McKevitt at the time. “A drop in frequency was matched by a corresponding uplift in the amount spent on each trip to £26.02 – easily the highest figure ever recorded by Kantar and £7 greater than last year.”

This change in behaviour initially helped the grocers smooth out availability issues that plagued them during the early weeks of the crisis as consumers stockpiled but it has now become a sustained change in shopper behaviour.

2. Shoppers stay local

dunelm1

People may have returned to the big grocery shop but they have been topping up what they buy with more visits to local convenience stores.

In late June, Kantar noted that local convenience store sales had ballooned 69.3% during lockdown as those working at home picked up food locally.

Footfall is the most resilient in local shopping destinations and food retailers are not the businesses benefiting. According to the latest Springboard weekly footfall figures, coastal towns and market towns fared the best in terms of visitors numbers, which were down 17.8% and 22.6% against last year, compared to the 56.1% drop in central London and 45.3% in regional cities.

Springboard marketing and insights director Diane Wehrle told Retail Week: “The destinations that may do the best out of all this longer-term are the quiet smaller town centres and more suburban high streets – the areas, ironically, that were most challenged pre-coronavirus.

“People are going to continue to stay local, even as stores more widely open up. They’re not going to want to travel and they will want to support local retailers, where they can.”

A number of retailers have already begun looking to capitalise on cheap retail property in more local locations, such as home and DIY retailer Dunelm, which opened its new Edit fascia in Crawley, and Morrisons’ clothing label Nutmeg.

3. City centre ghost towns

Pret social distance queue

The pandemic has turned retail property on its head. City centres that would usually be deemed as retail’s prime locations have been left ghost towns as people have worked from home and avoided what they fear could be busy locations.

While most major UK cities have been slow to rebound in terms of footfall, the problem is most stark in London.

According to the latest BRC-ShopperTrak footfall monitor in August, footfall in the capital was down 45.3% making it the worst impacted city. However, Manchester and Birmingham were not far behind with footfall down 40.6% and 39.4%, respectively.

Businesses that trade mainly in city centres such as Pret a Manger find themselves fighting for survival. The sandwich chain announced 2,890 redundancies and 28 shop closures last month as footfall at its London sites remains the lowest ever recorded and sales 60% lower than a year ago.

The slow return to city-centre shopping has led some retailers to rethink their store opening strategy. JD Sports boss Peter Cowgill told Retail Week it will be “much more stringent” when it comes to future store openings.

He said: “There is no point investing in these city centres at the moment when footfall is as low as it is. One of the most uneconomic places at the moment has to be Oxford Street – high rents, low footfall, what’s the point?”

4. Resilient retail parks

TK Maxx Orpington

While city centres may be struggling, there’s one type of retail destination that is faring better: retail parks.

Last week, footfall in retail parks was 12.5% lower than the same period last year, according to Springboard data, compared to a 34.3% plunge in high street destinations and 32.6% decline in shopping centres. This trend has been evident since stores reopened.

Being able to drive to such destinations, avoiding potentially crowded public transport, is appealing to shoppers at a time when we’re all urged to socially distance. 

Next boss Lord Wolfson highlighted that its retail park shops “where customers can park and walk straight into relatively spacious stores have performed much better” than its other stores since reopening.

Sales have been down 15% at Next’s retail park stores compared to 37% at its city-centre stores since stores opened their doors on June 15.

5. Return of the QR code

Burberry Shenzhen store - QR codes c Courtesy of Burberry_003

The QR code has experienced a revival during the pandemic as retailers use the technology to improve safety in stores and manage queues. 

At a time when businesses are encouraging contactless payments to reduce the amount of cash being handled, the QR code has re-emerged as a quick, easy and safer alternative to chip and pin. 

Supermarket giant Tesco has combined this method of payment with its Clubcard scheme, meaning customers can checkout and collect loyalty points simply by scanning one code. 

Other retailers including John Lewis and Asda, and retail destinations like Bicester Village, have piloted virtual queuing systems, allowing shoppers to scan a QR code and join a virtual queue, without having to stand in a physical line.

A form of technology that had seemingly been falling by the wayside in the UK has experienced a resurgence during the pandemic and could now be here to stay.

6. Shopping with intent

Dreams_instore

The swathe of protective measures put in place upon store reopening, from putting a lid on product testers in beauty chains to closing changing rooms at fashion retailers meant that customers that visit shops do so with buying, not browsing in mind.

Several retailers, particularly in big-ticket categories, reported that while footfall was down when stores reopened, spend across several branches were up as shoppers visited shops with a clear sense of what they wanted to buy.

Businesses ranging from JD Sports to Superdry and Dreams have all noted that shoppers are visiting stores in a more intentional way and buying what they want promptly to limit their exposure to the virus.

7. The enduring appeal of value fashion

Primark social distancing

When stores reopened on June 15, there were a few retailers that stood out from the crowd due to the long queues that they attracted. 

Value fashion players such as Primark, TK Maxx and Sports Direct were the most popular destinations as Brits returned to high streets.

Despite having no online outlet and enduring £450m losses per week during the lockdown period, Primark has bounced back since stores reopening, raking in £2bn of sales since mid-June. The retailer says its profits will now come in at the top of its revised £300m-£350m for its year to November 3.

TK Maxx has also been buoyed by an influx of last season’s stock from retailers looking to shift their excess inventory.

It appears that not even a pandemic can quell shoppers’ appetite for a fashion bargain and with conditions set to be tough as the furlough scheme ends, expect this trend to prevail.

8. An appetite for grocery apps

Waitrose Deliveroo trial

Shoppers have turned to apps like Deliveroo to not only buy takeaways but food essentials like milk, bread and, well, alcohol and a wealth of grocery retailers such as Morrisons, M&S, Aldi and Waitrose have partnered with the delivery firm to serve these customers.

This method allowed shoppers to get the food they need right now, without having to visit – or queue – at busy supermarkets.

For value grocer Aldi, which did not sell food online as the pandemic broke out, partnerships with Deliveroo enabled access to customers whose buying habits had completely changed as online shopping grew.

Stores have played a role in this service as items were picked from local shops to enable speedy delivery.

9. Click and collect erupts

booths

Click-and-collect services have been popular for years but retailers have further ramped up their capabilities during the pandemic.

Dixons Carphone and Marks & Spencer have launched “deliver to car” services while grocers like Aldi and Booths are trialling click-and-collect options for online orders.

To keep up with demand, John Lewis has partnered with the Co-op making both click-and-collect delivery and returns services available in more than 500 of its convenience stores - bringing the total stores with John Lewis services to nearly 900.

B&Q owner Kingfisher, which has posted a 243% rise in click-and-collect sales throughout lockdown, has turned to in-store picking to aid the fulfilment of orders and says it is its biggest growth channel. It has also added new smaller formats, including shop-in-shops in Asda stores, from which customers will be able to pick-up orders whilst doing their grocery shopping.

10. New formats highlight the shop is not dead

Amazon Fresh Woodland Hills Seafood Case

While footfall has fallen during the pandemic, the store is not dead. Shops still account for the lion’s share of sales and retailers’ faith in the future of bricks-and-mortar is evident in new formats designed to cater to customers in different ways and extend category appeal.

Next, for instance, has decided to launch a beauty and home format, including in locations where it will replace embattled department store group Debenhams, which has been a victim of the pandemic. The first three branches will open next month.

The value of shops and new store models is evident not just in the UK but internationally.

Online Goliath Amazon opened the doors of its first supermarket, in Los Angeles – evidence of stores’ enduring importance in retail despite the pandemic. The shop combines technology such as checkout-free payment with a more traditional grocery offer.