Has lockdown forever tipped the scales in the competition between online and physical retail?
It’s no surprise that online retail has shot up since the global spread of Covid-19. The introduction of lockdown made it near impossible for some companies to trade, as well as pushing more and more customers to source their essential – and non-essential – items from the online shelves.
While some companies have been permanently forced to close their doors, for others, it has meant the need to adapt in an online capacity. But what could this mean for the future? Now that the online market has had its chance to shine in the solo commerce spotlight, could this mean a permanent shift?
Let’s look at the figures
Figures show that online retail sales have been steadily increasing over the last decade. In fact, pre-pandemic, the figures were already set to grow by 2024, according to retail analysts at GlobalData, by a whopping 29.6 %. But now that lockdown has made its mark on the high street, those figures have rapidly increased.
Managing Director, Rick Smith, of company rescue specialists Forbes Burton, indicates we could see the demise of even more companies from the high street this year, saying “Retail has been hit particularly hard. Despite the Government’s care packages in the form of various loan schemes, it could be that we have to wave goodbye to a number of large brands or chains. Scale is important at a time like this, so those who have too many overheads not being serviced by a constant supply of footfall may find their physical presence in the high street might be too much to ride out.”
What about other factors?
Already appealing to the younger generation, lockdown has now introduced a further layer to the world of online retail. It’s attracted a whole new audience, in the form of the older generation. And while many a baby boomer had made a purchase or two online before the global crisis, the numbers weren’t high enough to threaten physical retailers.
Enter the rise of the ‘silver surfers’. E-commerce specialist ParcelHero highlights that the pandemic “has forced many older shoppers to buy online regularly for the first time.” And the physical stores can’t rely on sales to shift back naturally as a result of lockdown measures being further lifted. They continue, “E-commerce retailers need to lock-in lockdown changes now, to ensure they retain this huge new customer base.”
What does the future hold?
Now that the lockdown has been lifted, that doesn’t necessarily mean a rosy outlook for the physical retailer. In fact, many people are still feeling the effects of being cooped up inside for months on end. Some are too scared to brave the aisles of their favourite stores, further turning them on to online retailers.
And it’s not just in relation to clothing, books and other non-essential items. Online grocery sales continued to rise despite the easing of lockdown measures earlier on in the pandemic. Have people permanently traded in their trollies for a virtual basket?
With the presence of Covid-19 still lingering, the Centre for Retail Research has put together a Forecast for 2020, which sees potential store closures to reach 20,620 overall and a further rise of 235,704 when it comes to job losses.
For now, it’s hard to say whether the lockdown has made a permanent mark on the physical and online real world. With the virus still firmly spreading, a second lockdown could be introduced, further tipping the scales in favour of e-Commerce. The more customers flock to their digital screens as opposed to the newly introduced plastic ones, time will tell whether online sales could form the majority.
Arrange a free consultation with our team of experienced and approachable tax incentive advisors today. At Kene Partners, our mission is to help innovative companies access millions of pounds of government money set aside to foster innovation. Your business could be next.