DIGITAL AND DELIVERY SERVICES THRIVE ON OUTBREAK
Food delivery and digital subscription services are witnessing a surge in sales while department stores, fashion chains and restaurants are taking a hit, as consumers opt to stay in with a takeaway to avoid the recent storms and the coronavirus outbreak.
In the latest blow to retailers already suffering from the shift to online shopping, more than a quarter of shoppers said they were avoiding high streets and other busy places because they were afraid of contracting the bug, according to a survey by debit and credit card operator Barclaycard.
Department store sales slid 3.6% in February and restaurants took a 6.4% hit, while spending on clothing dropped 1.7% as shoppers stayed at home to avoid storms Ciara and Dennis, according to the card firm.
Travel agents and airlines saw sales fall by 0.3% and 0.7% respectively – before the most draconian travel restrictions, relating to countries such as Italy and China, kicked in.
In contrast, digital content and subscriptions services – such as Netflix and Now TV – saw growth of 12.4%, while takeaways and fast food sales rose 8.7%.
The figures were backed up by data from the British Retail Consortium (BRC) and advisory firm KPMG, which showed a 0.4% slide in sales at established stores last month. Online non-food sales rose 3.6% compared with a 1.8% decline in stores. Food sales rose 1%.
Helen Dickinson, chief executive of the BRC, said: “Clouds continued to hang over the retail industry in February, as Storms Ciara, Dennis and Jorge took their toll on retail sales, particularly in fashion.
“Despite many indicators suggesting a rise in confidence among UK shoppers in recent months, this has failed to translate into higher retail sales. However, the end of the month saw a slight rise in spending on food and healthcare as a result of concerns around coronavirus.”
Paul Martin, UK head of retail at KPMG, said the much hoped for “Boris bounce” that was supposed to follow December’s election had struggled to materialise and coronavirus was now having an impact.
“February saw the UK get hit by one storm after another, so it’s unsurprising that online fared fractionally better than the high street. Generally, though, demand for non-food items remains woefully low.”
The BRC and Barclaycard figures do not include a rapid rise in sales at supermarkets in the past week as shoppers have stocked up on essentials such as toilet rolls, hand sanitiser, dried pasta and tinned tomatoes. Neither does it include hospitality businesses, such as nightclubs, hotels and restaurants, that have seen a downturn in sales and cancelled bookings. Martin said: “The coming weeks will be of key importance to the sector. Retailers will be hoping that the chancellor can provide stability and certainty after prolonged volatility and uncertainty.
“Business rates will be front of mind for many but it remains to be seen whether any form of relief will be offered. Even then, that relief could be too little, too late for some of those struggling.”
Retailers are hoping that Rishi Sunak will give more details on the Conservatives’ manifesto commitment to carry out a “fundamental review” of business rates in Wednesday’s budget after a string of high-profile failures including Mothercare and Beales as well as multiple store closures by the likes of Debenhams and Marks & Spencer.
Last month, more than 50 retail industry leaders, including the chief executives of M&S, Boots and Debenhams, wrote to the then chancellor – Sajid Javid – calling for action on business rates.