- Retailers were already under pressure prior to the pandemic, struggling to adapt to a growing online world and facing lower margins amid a plethora of competitors.
- The Covid-19 outbreak has accelerated some of these trends.
- However, as lockdowns start to lift, many consumers in Europe have returned to stores, with some people happy to wait for hours before being allowed inside.
The coronavirus pandemic is likely to change how and what consumers buy, forcing the retail industry to quickly innovate in a race that’s likely to squeeze smaller brands.
Retailers were already under pressure prior to the pandemic, struggling to adapt to a growing online world and facing lower margins amid a plethora of competitors. The Covid-19 outbreak has accelerated some of these trends, with more people shopping online and an inventory excess that’s likely to cut margins even further.
However, analysts are confident that the pandemic is not the end of Main Street.
“I am quite bullish on this,” Aneesha Sherman, senior analyst of European general retail at Bernstein, told CNBC last week.
“People like buying in store, even millennials and Gen Z who have all the apps on their phones, still like to shop in stores.” Researchers define millennials as those born between 1980 and the mid-1990s, while “Gen Z” or Generation Z refers to those born between the mid-1990s and early 2010s.
Several brands have recently announced store closures given the financial pressure from the virus. For instance, Inditex, the retail giant which owns Zara, announced earlier this month that it would close between 1,000 and 1,200 shops worldwide.
In addition, other retailers have fallen into administration as the virus exacerbated their liquidity problems. This has been the case for Oasis, Warehouse, Debenhams and Cath Kidston, to name some of the British names affected.
As lockdowns have started to lift, many consumers in Europe have returned to stores, with some people happy to line up for hours before being allowed inside.
“A lot of people want to get back to doing normal things,” Jat Sahi, retail consultant at Fujitsu, told CNBC. “Going into a store and going shopping could be a part of bringing that normality back.”
Though many European governments have now lifted some lockdown restrictions, challenges remain when it comes to vacations abroad, cultural events, and most people are still being encouraged to work from home.
It means shopping has become one of the few social options available and larger shopping centers could benefit from this.
“Malls and retail parks will do better because they are able to do social distancing. They are wide, open spaces, they have big passage ways, it doesn’t feel unsafe,” Bernstein’s Sherman said.