Non-essential shops are now open across the UK, although some may not be for long. Not because of the second wave of Covid, but because of declining sales. Many store closures have already been announced and many experts expect more over the coming months. But where are they all going? Well, online of course!
The High Street was Already in Trouble before COVID
The British high street has been hit hard in the past few years. From rising rent costs, to economic de-stabilisation due to Brexit, to the competition from big eCommerce brands, retail shops are facing enormous challenges to growth. Now, with Covid, high street retailers have faced the lowest drop in sales in UK history.
Regardless of the advent of Covid, our high street has been in decline for decades. According to research, the number of people visiting Britain’s high streets has fallen by 20% in the last decade.While shoppers have fallen, shop closures continue to increase. Between 2016 and 2019, the number of empty stores rose to 26,000. This accounts for 12.1% of all British retail shops, according to the Local Data Company, based on a sample of the top 650 town centres in the country.
Prior to lockdown, many retail shops were already in a vulnerable position. Before Covid, there were already around 14 shops shutting down every day. 2019 was reported as one of the worst years on record for retail in the last quarter of a century. In recent years, due to failing business, hundreds of thousands of retail jobs have been lost.
COVID has Deeply Impacted HIgh Street Decline
And then came COVID. The Centre for Retail Research predicts a total job loss of 236,704 in 2020 and a total of 20,620 store closures. Forrester has predicted that the global loss in the retail sector will likely hit $2.1 trillion in 2020 and will take four years to overtake the levels of growth seen before the pandemic.
According to Melanie Leech of the British Property Federation, empty shops will become a norm as we move forward out of lockdown. “Inevitably there will be casualties” among retailers, and that predicted 50% reduction in shops on a typical high street was now likely to take place over a shorter timeframe. We will see empty premises, because not all businesses will make it through. I can’t put a number on that, but that trend was happening anyway and will be vastly accelerated by the impact of coronavirus.”
For physical shops that have not committed to Digital Transformation in the past few months, the situation is quite dire. For those relying on footfall and shop visits, the future looks very uncertain. Andrew Goodacre, the chief executive of the British Independent Retailers Association, told MPs that 20% of its members may not reopen because it would be more expensive for them to run their shops if footfall is low.
The Shift from High Street to Ecommerce
Many of our favourite brick and mortar shops have already announced it is closing its doors. Debenhams, Cath Kidson, Laura Ashley, Animal, Oasis and many others have made the announcement already. But, many of these brands are not disappearing, they are merely heading online. Cath Kitson have transferred its product offering to online only moving forward. Boohoo.com, who have seen a sales increase of 45% over the last three months, have bought both Oasis and Warehouse allowing for continued online only sales of the clothing lines. Like our other retailers, Debenhams also intends to continue trading online. Also, major UK retailers like Boots have shifted from high street to online as well. Boots just announced the closing of 60 shops across the UK in favour of increasing online sales.
According to eConsultancy data, in May 33.4% of all sales were purchased online through eCommerce platforms. This represents a month on month growth of 19.7%. Although the impact will likely vary across different regions, it is thought that non-grocery offline sales will see a 20% decline in growth overall, while ecommerce continues to grow. GlobalWebIndex’s ninth release of its coronavirus research has revealed that nearly half of global consumers do not expect to resume shopping in brick-and-mortar shops for ‘some time’ or ‘a long time’ once lockdowns ease. Just 9% of shoppers, on average, expect that they will return to stores ‘immediately’ once they are allowed to. Given that, it appears that ecommerce will remain the first port of call for shoppers in our post-coronavirus era.
The Future of Ecommerce
With or without Covid, the future of ecommerce was always quite promising. It has even been said that, by 2040, 95% of purchases will be made online. All predictions point to year on year increases for online shopping. The graph below provided by Statistica illustrates this point.
While the post-Covid era and economic situation is still unknown, one thing is clear; the digital future is now. Small business and retailers should be otpimising their online presence today and offering all products and services to be accessed and purchased online.
Need help? Contact Mister Digital today for a free site assessment and digital transformation plan.