On Monday 15 June, at least in England, stores across all retail categories were able to reopen for the first time in three months. Retail Economics looked at what 50 major non-essential brands decided to do in practice. Just over half (52%) reopened all their stores immediately, while the rest opted for a phased response, opening only selected outlets on day one.
For returning shoppers, the retail experience was far from normal, with tough new health and safety measures in place. Limits on customer numbers, social distancing floor markers, one-way systems and protective screens at tills are now the norm. Toilets and fitting rooms have been cordoned off.
Many shoppers did return, with footfall in high streets up 52% week-on-week, and uplifts of 37% and 25% in shopping centres and retail parks respectively. However, retailers continue to have difficult discussions with landlords, and store portfolio rationalisations look likely given the shift to e-commerce that the coronavirus pandemic has accelerated.
Indeed, the momentum of e-commerce continues to be staggering. Online sales (non-seasonally adjusted, excluding automotive fuel) were up 59% year-on-year in May and accounted for 32.8% of total sales, a record high. Just a year previously, the figure was 18.8%. Food and clothing contributed to this surge, alongside household goods, following some disruption in April.
This drive to online will continue, with the sector now investing in infrastructure and logistics. DPD, for example, has promised to invest £200m in new vehicles and depots to serve its next-day delivery capabilities, for which demand has risen significantly.
Collaborations are also continuing at pace. Deliveroo continues to sign new partnerships, agreeing arrangements with Booths and Holland & Barrett for home deliveries in the past few days, and an extension of its partnership with Aldi. Pret A Manger has also signed up with Deliveroo in a click and collect trial.
Homewares, lifestyle and fashion
Our website and our recent industry webinar include new insights on supply chain diversification, which is an important focus for the sector in the wake of the coronavirus pandemic. Some businesses have found themselves unable to meet surging demand during the pandemic. Sectors such as online household goods reported growth of more than 100% because of over-reliance on a single country, or other supply chain issues.
Our webinar highlighted some of the advantages available from digitising the supply chain. It also considered the sourcing opportunities that India has to offer. India is already a significant clothing producer, with around 100,000 factories and £30bn of exports. It’s keen to collaborate with UK importers, opening new apparel parks and forming regional clusters that potentially offer a one-stop shop.
Santander’s ecosystem of partners with experience of India can support businesses with connections to responsible and trusted manufacturers. Supply Compass, for example, operates a digital supply platform, while Sannam S4 offers support with in-country set-up. Our own supplier finance solutions could also prove valuable as businesses look for transparency around payments and working capital to establish strong relationships with new suppliers.
Health and beauty
The British Retail Consortium has worked with the cosmetics industry trade association to launch a new charter on the safe reopening of beauty counters, offering guidance for staff and customers alike. Full details here.
Food and drink wholesale, retail and franchising
New data from Visa Consumer suggests sales volumes for Food and Beverages and Tobacco were up 36.3% in May.
Elsewhere, our next coronavirus Views from the Industry webinar will focus on how the South African industry can support retailers and wholesalers with direct sourcing opportunities, both in the wake of coronavirus, but also following Brexit. We’ll also discuss trends across retail and wholesale. We’ll share a link next week.
Santander support in the UK
This is a crisis in which brands will be remembered for how they act. For our part, we’re continuing to look at how to serve clients better. We have a range of initiatives to support retail and wholesale clients (in addition to our Trade Club & Wholesale & Retail International connectivity proposition).
- Santander Retailer Offers – we’re working on a project to make it possible for brands to sell their excess stock online through our Retailer Offers programme, which enables around 2.7 million Santander personal customers to earn cashback when shopping at selected merchants. More details here.
- Liquidity management – for businesses selling essential goods and experienced increased demand, we’re offering targeted support for short- and medium-term liquidity management to make sure they can optimise returns on surplus funds. More details here.
- Supply chain diversification and finance solutions – we can offer supply chain efficiency and sourcing support to fashion and homewares retailers and wholesalers via our partner, Supply Compass. Their digital platform integrates with retailers’ existing suppliers. We offer sourcing support to 50 accredited manufacturers in India, plus some in Portugal. We also have an integrated supply chain finance solution to support working capital requirements, which may be strained by new suppliers’ credit terms.