New data from Edge by Ascential shows a vastly changed outlook for retail channels across the UK as the Covid-19 pandemic has drastically altered the retail landscape and consumer spending habits.

As the UK begins reopening all stores for business, Edge has amended its forecasts for the leading UK retailers in 2020, presenting a very different post-pandemic picture.

Unsurprisingly, there is better than originally anticipated growth now forecast for the grocers, who have benefited from stockpiling and increased home eating in 2020, as well as a trend towards bigger basket sizes.

Supermarkets and hypermarkets are now expected to grow by 3% this year as a result of these changes. Meanwhile, discounters are anticipated to pick up additional growth as shoppers prioritise value amid growing economic uncertainty.

Pharma and health providers will also receive a boost due to rising health and hygiene awareness.

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Discretionary spend more challenging

Capturing discretionary spend from consumers will be more of a challenge for retailers this year.

The hardest hit by Covid-19 among non-food channels will be fashion retailers, a sector that was already weak but has been impacted further by enforced store closures during lockdown and a climate of weak consumer confidence.

The decline of department stores in the UK has also been accelerated, with a number of high street retailers including Debenhams already facing bankruptcy.

The consumer electronics channel will see its growth decline by 4.9%, impacted by customers pulling back on discretionary spending.

However, electronics will also benefit from consumers staying at home for prolonged periods and adapting to homeworking, which saw demand for home-office equipment, smartphones and wearables surge in early 2020.

Meanwhile, home specialists will see a combination of downward impulses from deferred furniture purchases and upward impulses from smaller-scale home-improvement work, leading to a moderate decline of 3.7% in 2020.

Online strength across all channels

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Ecommerce was already set to become the largest channel in the UK during 2020, but it will now further widen the gap with bricks-and-mortar channels as a result of the pandemic, with online growing by 18.9% this year, 7.9 percentage points above the pre-Covid-19 forecast.

As shoppers gravitate towards online for grocery and essential shopping as well as discretionary categories, the channel is set to capture the equivalent of 98% of UK chain retail growth in 2020, according to Edge’s revised forecasts.

Ecommerce will get a long-term boost from lifestyle changes as a result of the pandemic, and it is anticipated that many categories moving online during lockdown will continue to thrive as consumers have greater motivation and fewer perceived barriers to actively spend online.

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Product categories that have drastically shifted online, such as health and beauty, grocery and pet care, will likely remain there.

UK’s leaders set to strengthen

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According to Edge’s revised forecasts, the UK’s market leaders will benefit by emerging stronger as the result of strong engagement in digital transformation.

This means that retailers including Tesco, Amazon and Sainsbury’s will receive an additional increase in sales of more than £4.3bn in 2020.

Going forward, these changes are likely to deepen the divide between agile retail leaders and the rest of the market.

Edge by Ascential delivers one of the industry’s most accurate and actionable sales-driving data, insights and advisory solution sets for global brands and retailers. You can find more information here.