How social distancing is affecting the retail sector

Today’s ONS retail sales data shows that February was a tough month for UK retailers even before the Covid-19 shutdown in March forced all non-essential stores to close. High street retailers were feeling the impact of continued bad weather, and when compared with February 2019, it reflected the lowest year-on-year growth rate for seven years, at negative 1.6%.

A few retailers said the impact of Covid-19 had affected sales of goods shipped from China – but the full impact of the outbreak will be shown in the March figures. The situation for non-essential retailers has been greatly exacerbated by social distancing and the current shutdown, with many high street stories seeing sales plunge. Some have closed their stores for the time being, with Apple, Selfridges and Ikea just a few of the big names that are limiting activity to online-only, as discretionary spend has plummeted.

Interestingly, today’s figures highlight that just before the outbreak, textile, clothing and footwear were up on the previous three months, whilst food stores were slightly down. This has all been turned around by Covid-19, with food and grocery stores a experiencing a huge boom in sales as consumers look to stock up on non-perishables, over-the-counter medicine and household essentials, whilst food delivery has exploded.

Average supermarket spend up 16%

Recent statistics showed that the average spend per trip in supermarkets is up 16% to £22.13*, with this largely being attributed to ‘accidental stockpilers’ – or the fact that people are buying a few extra items each shop, not necessarily buying lots of the same item.

Internet sales increased by 5% in February 2020, when compared with February 2019 –a trend we expect will be reflected heavily in the statistics for March. It’s likely that online shopping will see further increases in certain areas as the public observe the government’s instructions to stay at home. Toys, electrical goods, gaming and even furniture are all expected to benefit, along with delivery and logistics companies.

The government has offered various means of support as businesses adapt and adjust – including a ‘Coronavirus job retention scheme’, business interruption loans, deferred tax payments, and a 12-month business rates holiday for all retail, hospitality and leisure businesses in England. These will be a major support for retailers at this critical time. However, they also need to think about the longer-term and start adapting their models if appropriate.

Scams on the rise with a quarter of consumers targeted

For many in the e-commerce world, social distancing may have inadvertently boosted business but will also have exposed them to greater risk. Fraudsters are exploiting the sudden demand, with a surge in online scams, whilst businesses’ manual lines of defence are impacted by staff working from home. Our own research has shown that more than one in five (22.4%) UK consumers believe they have been targeted by fraudsters, with almost a quarter of those (5.3%) succumbing to the scams.

Businesses need to be doing all they can to protect themselves and their customers from fraud and there are tools available to help them do that without impeding the customer journey. Our guide to tackling fraud in e-commerce gives retailers some helpful tips.

By Ryan Kemp, director of retail at TransUnion in the UK