The Effects of Coronavirus on the Retail Sector

2020 has seen stores closing and brands folding at an unprecedented rate due to the effects of the Coronavirus pandemic. Critics had already called the death-knell for high street retail in 2018, but this year has seen many predictions rapidly accelerate. 

We didn't believe in the end of retail then, and most certainly do not today. Retail is evolving, and will continue to do so. Brands must realign strategies to meet the demands of consumers, while creating experiences and communications that resonate with the changing consumer.

The pandemic has effected the fundamentals of fashion retail, from supply chains to points of sale, both on-and-offline. Supply chains have been tested and flaws have been exposed on a global scale. Brands and retailers have started to reconsider the merits of local suppliers in a bid to regain control of their manufacturing processes, paving the way for more reactive and on demand ordering. Zara took advantage of their flexible arrangements with local producers, allowing the brand to adapt to the changes in demand. 

As extended lengths of time at home crept on, studies showed a 65% jump in home deliveries from the previous quarter, as increasing numbers of consumers turned to e-commerce to get their 'retail fix'. This mass migration to online-only shopping put considerable pressure on suppliers and delivery services, causing significant delays in delivery times and reduced product availability. 

When homes suddenly became the hub of our day to day lives, comfort and ease moved to the forefront of the consumer mindset, directly impacting purchase decisions. Sleepwear, loungewear, athleisure and sportswear categories grew significantly. Activewear brand Gymshark saw US sales grow by 856% year-on-year for the first week of July, while Lululemon and Alo Yoga also experienced a spike in sales with an overall 6.6% growth in activewear across the globe, according to Euromonitor. An intensified interest in health and wellbeing amongst consumers will continue to provide momentum for brands in this field, particularly through digital fitness platforms and virtual classes. Naturally, while brands focussed on relaxed aesthetics have thrived, smarter categories and suiting have rapidly declined. Massimo Dutti experienced their biggest drop in first-half sales, reporting a 42% decline.

The considerable shifts caused by the pandemic have forced many retailers to reimagine what the modern retail eco-system could and should look like, from concept, to production, to delivery. With reduced footfall expected to continue, store spaces must evolve, incentivising consumers with experiences or offerings that cannot be replicated online. Brands that can not keep up with the changing needs of consumers, will quickly fall behind.