Commenting on non-essential retail stores re-opening from Monday 15 June, Paul Martin, UK head of retail at KPMG, said: “For those retailers that were deemed non-essential during the nation’s lockdown, the re-opening of stores on Monday 15 June mark a pivotal date. Their businesses will finally be able to return, but the situation remains far from normal and many won’t be in a position to start where they left off.
“Store re-openings are likely to be a gradual affair, with the safety of workers and consumers placed front of mind. Some stores may not even reopen at all, as retailers reassess which sites are most commercially viable for them to continue operating. We’ll also likely see a flurry of retail casualties in the coming weeks and months too, especially with quarterly rent on commercial property due on June 24th.
“In the context of store re-openings, we have to remember that customer footfall plays a key role in determining the success of stores, and without the added traffic from workers popping in during their lunchbreak, or consumers socialising nearby, customer numbers are likely to remain low in the short- to medium-term. Without a vaccine, many shoppers will still remain cautious, continuing to log-on rather than hit the high street. What’s more, the experience they once sought isn’t likely to be the same currently, with obvious issues around trying items on for size or controlling crowd numbers, for example.
“There is no denying that many retailers will now be sitting on surplus stock, especially if we’re referring to categories that have been largely overlooked during lockdown – especially fashion. Retailers may well be tempted to aggressively discount in order to get stock moving again, but they need to avoid putting their margins under further pressure. They also need to be mindful of the likely surge in returns that could follow, which in the current climate could cause another headache to contend with.
“Stores may well have the green light to reopen, but the consumer landscape has undoubtedly changed significantly in light of COVID-19. In many ways, we’ll see an acceleration of the changes that were already underway. The change in consumer behaviour meant that retailers were likely to lose 25 per cent of their physical presence by 2025. That’s now likely to be a reality by 2022/23. The rise in online transactions – currently accounting for more than 60% of non-food sales – means that the channel will likely continue to be more prominent. That will mean less demand for physical stores, and with it regrettably less demand for staff on the ground.
“Fundamentally, retailers aren’t just thinking about opening their front doors, they’re thinking about whether their business model and proposition is still valid; whether their customers still consider them relevant; and whether they have the resources at hand to recover and accept the environment in which they now operate.”