Looking ahead. Retail post COVID-19

intu’s head of analytics and insights James Miller focuses in on what retail brands and their landlords might expect post COVID-19

The outbreak of coronavirus has generated huge challenges for the UK retail and leisure sectors, with some high-profile casualties reported already.

Many shops, restaurants and leisure providers have seen almost full-scale shut down of their physical outlets or operations, leaving many uncertain about the future.

With no clarity on how and when the UK will emerge from lockdown, it is still unclear what the landscape will look like post-crisis.

However, as the situation progresses globally, and the first countries across Asia and Europe begin to emerge from the depths of the outbreak back to a ‘new normal’, industry experts have started to speculate on what the path to recovery might look like here in the UK.

Here, intu’s head of analytics and insights James Miller focuses in on what retail brands and their landlords might expect, alongside some insight on the leisure sector more generally. Specifically he takes a look at where, while the road will undoubtedly be rocky, there may be some cause for optimism.

Post crisis spending power

We do not yet know what the full impact of the crisis will be on disposable income and consumer confidence. However, the potential for mass unemployment has been reduced considerably by government salary support scheme, which should help ensure spending power remains at least to some extent once the crisis has passed.

We may, as a result, see at least some bounce back in spending, due to:

  • Delayed expenditure – whilst caution will undoubtedly remain, non-food spending is likely to experience some uplift as the population leaves ‘lockdown’ and consumers make purchases that had been put on hold. The current “pay-it-forward” trend, in which consumers are buying vouchers for their favourite brands/restaurants are also likely to be redeemed in the weeks following the end of the crisis
  • Food, beverage & leisure spend boost – as restrictions begin to lift, these categories will benefit from people’s eagerness to return to normality and socialise with those they have not been able to for many weeks. Whilst a return to full capacity/function is likely to be controlled and gradual, many consumers will be keen to make use of the services once they can do so safely

A recent study of consumers in China during lockdown by Kantar supports these ideas. It found that 65%, 58% and 55% of people were most looking forward to returning to out-of-home dining, shopping and entertainment respectively, following the lift of restrictions.

A renewed enthusiasm for health & wellness

Prior to the outbreak of coronavirus, the health & wellness sector was going from strength to strength.

It is possible that the crisis will accelerate this trend. For many, the pandemic has increased focus on managing diet, fitness and mental wellbeing. Consumers are now more attuned to health risks than ever before.

Our research indicates that customers will carry this through and show greater interest in  as we return to normality.

New forms of leisure: online entertainment moves from ‘clicks to bricks’

With the nation stuck at home, it is no surprise that online entertainment has witnessed a real boost.

As restrictions are lifted, our research shows that we may see some of these virtual entertainment brands make the switch from ‘clicks-to-bricks,’ opening experiential stores, following their ‘lockdown success’. A new following and boost to income will provide them with the means and confidence to take the step.

More electronic gaming and VR experience stores could also spring up in shopping areas across the UK, for example.

The rise of localism: a boost for independent brands

Promotions across social media have exposed consumers to new local/independent businesses and the plight they have faced since the virus outbreak.

It is likely that consumers will feel a sense of loyalty to some of these brands. As we return to normality, we may see more landlords and shopping centres offer vacant space to elevate these local/independent companies, which have grown in popularity during lockdown.

Encouraging customers back: new approaches

Further down the line, as lockdown eases, we will likely see retailers and leisure providers using new tools and tactics to encourage consumers back.

Those who have shut down physical operations completely will be starting from zero footfall, so we can expect efforts to re-dominate consumer spending as we return to some form of normality.

Customers have a lot of choices and will be more cautious than before, so finding new ways to make brands appealing, in line with social distancing rules, will be key.

Marketing strategies will likely change, become more targeted and also focus on driving loyalty.

We may also see more pop-ups, events and unique experiences - in line with social distancing rules, and as government policy allows - to revitalise business as people return to shopping destinations.

Landlords will be working to actively support these new tactics – by ensuring measures are in place to allow for compliance with social distancing, for example – to help brands get back in front of visitors.

In conclusion

Whilst some of these insights are encouraging, the recovery from COVID-19 will, of course, bring huge challenge for the retail and wider leisure industry.

We are yet to see the full impact on consumer shopping habits, and how the crisis will impact the various channels through which shoppers now purchase goods.

There are also questions around managing health & safety in public spaces – including high streets and shopping centres - going forward.

These are all things that the sector and relevant policymakers are working hard to address, and we will carefully manage the transition a ‘new normal’ way of life.

While we don’t imagine things will suddenly return to how they were, we will at least have greater clarity in the weeks ahead. We will be providing regular insight as the situation progresses, looking at what a potential transition or ‘new normal’ looks like.