MAGGIE PAGANO: With consumers tightening belts, investing in food and drink – and cardboard – manufacturers for home deliveries is the way to go
- Footfall in shopping sites on Boxing Day was 45 per cent lower than in 2019
- Again, big city centres are hit hardest by the pandemic as people avoid crowds
- What we will see next year is a continued shift towards online
It’s hardly a surprise that the traditional bumper Boxing Day sales were so disappointing. Many of the UK’s top retailers such as Marks & Spencer, Next and John Lewis were closed to thank staff for working long hours over the past year.
The fact that Boxing Day fell on a Sunday for the first time in 11 years also meant that some of us are enjoying a four-day holiday break, giving plenty of time to go shopping rather than queue in the pouring rain on the High Street.
Rather sensibly, many didn’t bother to rush to the shops. As Springboard reported, footfall in shopping sites on Sunday was 45 per cent lower than in 2019, 67 per cent down in central London and 58 per cent lower in other big cities. Footfall was even lower in the other UK nations where restrictions are tighter.
Losing its punch: It’s hardly a surprise that the traditional bumper Boxing Day sales were so disappointing.
Once again, the big city centres are hit hardest by the pandemic as people avoid crowds: the New West End Company, which represents 600 London businesses, says footfall was down 44 per cent as against 2019.
Even the mighty are suffering. Harvey Nichols – which has eight stores in the UK and Ireland – has just secured an emergency £66m of funding after annual losses more than doubled to £38m.
The luxury retailer, which had to close its stores for nearly eight months, saw sales nearly halved. Online shopping did not make up for the drop in footfall in city centres and the closure of the stores.
In contrast, trading in smaller market towns and specialist farm outlets held up, as it did in London suburbs. Staying local is the new normal and may be one of the lasting legacies of these strange times.
Yet the national picture may be brightening. Next reports that shoppers were queuing in the early hours yesterday for the 6am opening of stores across the country.
Some customers were so keen to go bargain-hunting that they queued for three hours at the Silverlink Shopping Park in North Tyneside. On average, shoppers will spend £247 each in the end-of-year sales – about £85 up on 2020 and £61 more than 2019.
It’s too soon to say whether this latest spurt in shopping will make up for what retailers say was poor Christmas trading but we will get a better feel when retailers give their trading updates.
Several retailers including Boohoo have already indicated just how tough trading has been this year. It has issued a profit warning, reporting slower sales growth and squeezed profit margins because of higher returns and delivery disruptions.
Even allowing for the longer holiday break, the trading outlook looks bleak. The first quarter of the year is always a slow time for retail but the sector is likely to look worse than usual, whether further restrictions come in or not.
What we will see next year though is a continued shift towards online, which is now nearly a third of all purchases. This trend will be particularly marked in the food and drink sectors. With so many people now working from home and fear levels remaining high, the nation’s social life has more or less ground to a standstill.
If there are fewer of us going to the cinema or football or, dare one say, holding parties, then we don’t need to dress up – or down – so much. As Harvey Nichols and Boohoo have discovered, there’s no point buying fancy gear for parties that won’t happen.
Couple the anxiety over going out with the soaring cost of living and consumers are tightening belts a notch or two. Investing in food and drink – and cardboard – manufacturers for home deliveries is the way to go.