Retailers in the West are still reeling from lockdown measures, the effects of which are likely to continue to affect the sector throughout the year as fewer people are predicted to go shopping, even after lockdown is lifted. Problems with cash flow and manufacturing closures in the East have worsened the situation. However, the light at the end of the tunnel can be seen; some countries have plans to allow retailers to reopen and luxury conglomerates have reported an increase in sales in Asia, the first area to emerge from lockdown.
Stay-at-home measures have instilled a fear into people, with a US report by Morning Consult found that at least 25% of consumers would not feel comfortable in shopping centres for six months minimum. Many Brits, particularly those facing precarity after job losses, are likely to be less inclined to spend money on non-essential items. The return to life as normal in retail will not be immediate, as consumer insecurity will keep some people away for some time yet.
The UK’s clothing and footwear market is likely to lose £14billion, dropping by 26.1% compared to 2019, according to GlobalData. Footfall dropped by 44.7% overall in March, down to 83.2% after government-mandated measures were introduced. Suppliers in Asia have seen mass lay-offs and retailers have equally struggled to pay for orders placed. The Workers Rights Consortium in the UK estimates that £20 billion worth of orders have been cancelled, leading to protests in Bangladesh.
The British Retail Consortium is unsure when UK retail will return to normal, but Professor Joshua Bamfield of The Centre for Retail Research predicted six months minimum, perhaps relaxing restrictions in phases.
“We’re clearly far from things being over, and the UK is looking more like Italy/Spain than it is like China at the moment,” the BRC added.
Meanwhile, there is some better news on the continent, as some European countries relax their own lockdowns in May: Germany will be opening some larger stores from the fourth; France will begin opening retailers on the eleventh; Austria will start their process from the first.
Luxury buying has also seen some strides towards recovery, as LVMH has seen an upturn in Chinese sales. After a 15% drop in revenue reported on 16 April, they’re hoping for their rebound in May or June, if we avoid a second wave of illnesses. Green shoots in Asia are equally reported by L’Oréal, the cosmetics conglomerate. Italy has even seen some signs of rebirth in the luxury industry, as Gucci reports a small team getting back work in Florence, making prototypes for leather goods.
The bounce-back for luxury travel is expected to be strong, with an increase in cruise bookings for 2021. The sector is worth £1.3 trillion, but is going to lose £255 billion in 2020, according to the International Air Transport Association. Cancelled holidays will mean a deserted Mediterranean coast this summer.