Retail has always been a highly dynamic industry, intensely competitive and fighting for a share of the wider consumer spending pot. This is an industry used to dealing with a constant diet of change. However, the change we are seeing today is far more profound than anything the past has thrown up. We are now seeing by far the most challenging period in retail history. A reshaping of the industry’s structure and economics is unfolding, and most of the real change is yet to happen.

Richardtalksretail is focused on analysing this change, anticipating the implications, and mapping how the key players across the various sectors are dealing with it. The regular Blogs in this public section of the site are a taster of the much more detailed analysis and forecasts in the premium section, reserved for subscribers.

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Locked down and pent up

The big day in retail has finally arrived. For an industry which relies on the numbers generated from daily trading to inform actions, today will have been full of mixed messages. But the overriding one will be that this will be a long and painful road back to anything that might resemble equilibrium.

Experiences of lockdown have varied hugely, and so too will be recovery. Some have been desperate to go leisure shopping while others will take lots of coaxing and reassurance before entering the fray. A consensus of the CEOs I have spoken to were expecting c50% of normal footfall today. My feeling is that few will have achieved that. Many of the stores I have checked out had far more staff than shoppers, and queues were extremely rare.

Clearly, the industry is desperate to reopen and there is certainly a feeling today that a major step forward has been taken. However, no one should be in any doubt about the economic consequences of Covid-19 which will only now begin to unfold. Even at 50% footfall, no apparel retailer can make any money at all and are likely to generate very material losses. While transaction values are likely to be higher, that will not compensate for fewer transactions.

Moving to 1 metre distancing would certainly shift the economic dial but modestly, and not enough to turn those losses into profits. This is especially so when much higher returns are factored in, the result of limited access to changing rooms. On the cost side, delivering staff and customer safety will have increased costs. The end of the “cost holiday” enjoyed triggered by opening (having to pay staff, landlords and suppliers) sets a return to normal costs alongside a return of materially less than normal footfall.

Anyone relying on consumers to rescue our economy must be living on a different planet. The public has survived several months going without all sorts of non-essential products and services. Persuading them back, with growing uncertainty around employment and remaining uncertainty around health, will be a monumental task.

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