Coronavirus outbreak to cost UK retail sector almost 13 billion pounds in 2020 | Progresiv
The impact of coronavirus crisis will wipe 12.6 billion pounds from retail sales this year, according to preliminary forecasts by analysts at GlobalData. This is equivalent to more than Aldi’s total UK sales last year. 
Patrick O’Brien, UK Retail Research Director at GlobalData, commented: “While the food and grocery market will grow at the fastest rate for decades, this will not stop the overall market falling as non-food spend is forecast to drop by 8.9%. The impact on non-food is far worse even than during the financial crisis of 2009 when sales fell 2.9%.”
The firm’s forecasts are based on the pandemic peaking in April with most stores either closed or severely affected until late May, with non-food spend starting to recover in June, but with more normal spending patterns not arriving until October.
GlobalData expects the UK food and grocery market to grow at an unprecedented rate of 7.1% in 2020 – adding 6.8 billion pounds to the previous forecasted annual spend in 2020. “This additional growth stems from a significant uplift in volume sales, as shoppers buy more than they need at supermarkets (particularly across food and household products), as well as gaining from consumers transferring spend from foodservice operators to supermarkets and other food retailers,” said O’Brien.
Meanwhile, the clothing and footwear sector is expected to be hit the hardest with spend forecast to decline by 20.6% to 11.1 billion pounds in 2020. This is equivalent to the combined clothing sales of the three market leaders Primark, Marks & Spencer and Next. The sector will suffer due to its non-essential nature and the eliminated need for new clothes as the public avoids social interactions and many self-isolate. This will cause the key spring/summer season to be a write-off.
O’Brien said: “Retailers will be forced to cancel (as Primark has already done), postpone or redesign orders to avoid significant levels of terminal stock loss in June and July. We expect to see several fashion retailers collapse into administration as a result, with the sector already in a vulnerable state.
“Although the online channel will remain accessible to shoppers, we still expect to see a sharp decline in sales here as no amount of spare time at home to browse online will compensate for the lack of events to wear new clothes for.”
GlobalData expects the total value of the retail market in 2020 to reach 333.7 billion pounds from its original forecast of 346.3 billion pounds. This is 1.7% down on 2019 and compares to an original forecast of 2% growth. The company is currently forecasting a rebound in 2021 but only back to 2019 levels. “When the health crisis recedes, there will be a recession to deal with, and consumer confidence will take a long time to recover,” said O’Brien. (www.kamcity.com)
