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June 3, 2020

Shop prices fall fastest since 2006

  • Shop prices fell by 2.4% in May compared to a 1.7% decrease in April. This is below the 12- and 6-month average price decreases of 0.7% and 1.0%, respectively. This is the highest rate of decline since our series began in December 2006.
  • Non-food prices fell sharply by 4.6% in May compared to a decline of 3.7% in April. This is below the 12-and 6-month average price declines of 1.9% and 2.4%, respectively. This is the highest rate of decline since our series began in December 2006.
  • Food inflation eased to 1.5% in May, down from 1.8% in April. This is in line with the 12- and 6-month average price increases of 1.5% and 1.5%, respectively.
  • Fresh food inflation slowed to 0.5% in May, down from 1.0% in April. This is below the 12- and 6-month average price increases of 0.8% and 0.6%, respectively.
  • Ambient food inflation decelerated slightly to 2.9% in May down from 3.0 in April. This is above the 12- and 6-month average price increases of 2.5% and 2.6%, respectively.

Helen Dickinson OBE, chief executive, British Retail Consortium:

“Shop prices in May fell at their fastest rate since 2006, which was largely driven by the drop in non-food prices. Clothing and Furniture saw the biggest drop as retailers ran promotions to encourage consumer spending and attempted to mitigate recent losses. Year-on-year food prices increased slightly due to higher business costs, implementing social distancing measures and the upward pressure from labour shortages, but were down on the previous month as more home-grown produce became available. We expect to see continued upward pressure on food prices from the effects of the pandemic in the coming months, while non-food prices are likely to remain deflationary with subdued sales.

“Even as non-essential shops begin to reopen from 15 June, consumer demand is expected to remain weak and many retailers will have to fight to survive, especially with the added costs of social distancing measures. Retailers face an uphill battle to continue to provide their customers with high quality and great value products despite mounting costs. Government support remains essential, both to rebuild consumer confidence and to support the thousands of firms and millions of jobs that rely on it.”

Mike Watkins, head of retailer and Business Insight, Nielsen:

“With the retail industry coping with store closures and social distancing limitations, it’s no surprise to see shop price inflation slowing in recent weeks. Across the major supermarkets with sales growths in high single digits in May, the consumer spend on promotions has also been at an all-time low, but there has been little upwards pressure on prices. However, as we move towards summer with the importance of seasonal foods and with the supply chain still disrupted, we can anticipate some volatility in prices.”

June 1, 2020

BRC’s reaction to chancellor’s announcement on CJRS

Responding to the chancellor’s latest announcement, Helen Dickinson OBE, chief executive of the British Retail Consortium said:

“Retailers are working extremely hard to prepare shops for reopening and we welcome the furlough scheme extension which will continue to provide much-needed support.

“Businesses, however, will remain under pressure as discretionary spending is likely to remain subdued for some time, and there will be restrictions on the number of customers that can come into stores.

“The government has listened to the industry by bringing forward the ability to furlough part-time workers from July as retailers manage their workforce in the phased return to operations. This is in direct response to the BRC’s ask of HM Treasury. We look forward to having clarity soon on how extremely vulnerable colleagues and those that are shielding or have childcare obligations will be affected in the long term”

May 27, 2020

Home delivery on the menu for Scottish fruit and veg wholesaler

A family run fruit and vegetable wholesaler has launched a delivery service offering an expanded range of products to homes across Scotland’s Central Belt, with support from Bank of Scotland.

The majority of Charles Stamper Fruit & Veg’s customers, which include bars, restaurants, hotels and schools, closed their doors when the government mandated lockdown came into force on the 23rd of March, creating significant pressure on its cash flow.

In response, the Edinburgh business immediately decided to diversify into home delivery using its fleet of refrigerated vans. It set up a dedicated website to take orders and added household essentials to its product range, including tinned goods, condiments and kitchen roll.

The shift to home delivery was supported by long time banking partner, Bank of Scotland. It provided a six-figure loan through the government’s Coronavirus Business Interruption Loan Scheme (CBILS), helping the wholesaler pay new suppliers and cover costs while its catering customers are unable to pay for orders competed before Scotland entered lockdown.

Charles Stamper Fruit & Veg has provided Scotland’s hospitality, education and care sectors with fresh produce since 1992. Bar some specialty items that are imported from suppliers in Europe, all its products are sourced locally and delivered loose to minimise the use of plastics.

Louise Stamper, managing director, Charles Stamper Fruit & Veg, said: “We were watching television as a family when the stay at home order was announced and decided almost immediately to launch a home delivery service.

“Such a radical change seemed daunting at first. But, thanks to a massive team effort, we’ve now completed thousands of home orders. We’ve been blown away by the demand and motivated by all the positive feedback we’ve received on social media.

“Crucially, our new retail customers pay for goods ahead of delivery. It’s a departure from the traditional business model of a wholesaler that gives us steady income until our catering clients reopen. The support from Bank of Scotland has been invaluable as we’ve made that change.”

Daniel Burns, relationship manager at Bank of Scotland, added: “Charles Stamper Fruit & Veg is a prime example of a well-established, family run business that has quickly adapted its services during unprecedented times.

“The business’ focus on quality put it in a good position as home delivery became a preferred option for Scottish consumers keen to support local firms impacted by Covid-19. The loan we’ve provided will help Louise and the team take advantage of this demand and keep the business going until its catering customers are able to open their doors again.”

May 27, 2020

The high street will never be the same again

Retail figures for April released by the ONS  highlight how much retailers need to change the way they do business says leading tax and advisory firm Blick Rothenberg.

Milan Pandya, a partner at the firm said: “With the country in lockdown, it will come as no surprise that data released by ONS showed that there has been a huge decline of 18.1% in the volume of retail sales in April 2020 and some retailers reported zero sales. This monthly decline represents an unfortunate record and follows a monthly fall of 5.2% in March 2020.”

He added: “ The ONS report also shows that all retail sectors experienced a decline in April except for a record monthly increase of 18% in sales for non-store retailing, which largely comprises those which have an online presence only.

Furthermore, with many stores shifting to only online trading, there was an expected large rise in the proportion on online spend to 30.7% from, 19.1% in April 2019.

Milan said. With some businesses reporting no sales at all this indicates that they need to change completely the way that they do business.

He added: “Too many retail businesses have been sitting on excessive bricks and mortar portfolios in the UK’s high streets and not enough of them have embraced Internet shopping.

That must now all change if retail businesses who have traditionally traded on Britain’s high streets are to “bounce back” whatever the time frame.”

Milan said: “it’s going to be a difficult balancing act because for many communities both large and small the ‘Shop’ has an important part to play and social cohesion is going to be even more important going forward.”

Milan said: Communities have shown how they can come together digitally over recent weeks now retailers have to show how they can adapt and indeed some start their digital journey to ensure changing consumer preferences are adequately catered for.

He added: “They will have to create a new business plan, but it is one that has to be created. With the majority of shops closing during lockdown, the coronavirus crisis has driven consumers, and therefore retailers, online. But as lockdown measures are cautiously lifted, there is a growing opinion that consumer habits will have changed permanently and will swing more toward online purchasing.”

Milan Pandya said: “Typically, retail businesses have been too reliant on a physical presence, whether they are in city centre, or out of town. What this crisis and the impact on consumer buying behaviour has done is accelerate the need for those businesses to pivot more toward digitalisation.

“Retailers therefore now need to think about how they can sensibly exit some of their retail space. Doing so reduces certain fixed costs however, there’s also an investment cost to switch online.

“This pivot will have implications for a retailer’s supply chain and stock holding policy, which will also have an impact on staffing levels and how they are used. For example, shifting from staffing high street stores to providing pickers and packers for distribution centers.

The biggest challenges businesses have when they move to or increase their online footprints are that they:

  • Don’t do enough market research to understand what their website should look like, front and back
  • Don’t have an adequate stock holding and distribution policy to ensure that they can deliver their products to consumers in a timely way
  • Understanding what customers want from their online experience and creating this – many want the in-store experience delivered online.

Milan continues: “Getting these aspects right will ensure that customers have a simple and positive buying experience and that the retailer therefore doesn’t lose any custom long-term.”

May 26, 2020

Lockdown costing non-food stores £1.8bn a week

Helen Dickinson, chief executive of the British Retail Consortium, said:

“Many retailers are eagerly looking forward to reopening stores from 15th June in order to meet the needs of their customers. Lockdown has cost non-food stores £1.8bn a week in lost revenues and with sales expected to remain weak, even as shops begin to reopen, many retailers will still be in a fight for survival. Government must act to ensure that retail rents take account of the ongoing crisis in the industry. Swift action would protect jobs and businesses – helping retail to play its part in restarting the UK economy.”

May 26, 2020

April’s retail sales figures will mean cull of indie stores

Office of National Statistics (ONS) retail sales estimates for April will result in the extinction of many much-loved stores, fears the UK home delivery specialist ParcelHero. Scientists refer to the world’s biggest-ever extinction event 250 million years ago as ‘The Great Dying’, and ParcelHero says that the coronavirus could well create an equally catastrophic event on the high street.

The figures show a massive -18.1% decline in the overall amount spent by shoppers, the steepest drop since the ONS started predicting figures. This unenviable record replaces the previous, worst-ever figure of -5.2 set just a month ago in March, at the beginning of the lockdown. In contrast, online sales rose to grab 30.7% of all sales. ParcelHero’s head of consumer research, David Jinks MILT says April’s figures show only the fittest stores will survive:

‘April’s ONS retail estimates show we are looking on helplessly at the Great Dying of the High Street. The value of clothing and footwear sales crashed by -50.2% compared to March, for example. Even as high street fashion spending collapsed, however, online clothing snatched 46.4% of overall clothing sales. Only the fittest stores can hope to survive, meaning responsive, e-commerce sites and those major brands with a strong omnichannel – physical and online – strategy. Local, independent shops with little online presence are highly unlikely to survive such a long lockdown; nor are many big-name brands that never fully integrated store and web sales.

‘2020’s roll call of retailers entering administration or closing entirely is growing every day. Animal, Oasis, Warehouse, Laura Ashley, BrightHouse, Cath Kidston, Debenhams, Beales, Johnsons Shoes and Antler, the posh luggage brand, have all been hit hard. Covid-19 has hastened the demise of many stores and the Great Dying is a truly global wipe out. Even America’s largest department store chain, J C Penney, went into bankruptcy protection this month.‘Retailers must embrace omnichannel sales, with a completely integrated online and in-store experience. Otherwise, Britain’s shoppers may simply lose the habit of visiting stores as lockdown loosens. Key to this is encouraging Click & Collect. Integrated stores that enable customers to buy online and pick up in store will be ideally placed at the end of lockdown. People will want to enjoy limited social shopping once again, if only to get out of the house, but will need to know that if they make the effort to drive to a store, their item will be there.’

‘Household goods sales were hit nearly as badly as clothing, down -45.4% month on month, but online this retail sector soared by 38.1% compared to March, grabbing 55% of overall household goods sales.
‘Britain’s couriers are, of course, still picking up from businesses and warehouses nationwide, which means shipping products directly to customers is just as easy as it ever has been for specialist retailers. We believe indie retailers do still have a chance of survival if they source home delivery services quickly

May 26, 2020

BRC reacts to announcement on the reopening of retail

Responding to the Prime Minister’s announcement that retailers will be able to begin reopening next month, Helen Dickinson, chief executive of the British Retail Consortium, said:

“We welcome the announcement of the government’s roadmap for reopening a broader range of shops next month, which provides much needed clarity on the route ahead.

Safety is the fundamental concern for all retailers and they have been working hard to implement the necessary measures to operate safely over the past weeks. Now that we know which shops can open and when, retailers can begin communicating their plans with their workforces and customers. The industry stands ready to play its part in getting the economy moving again.”

May 20, 2020

Lockdown and the rise of the silver surfers

The coronavirus has forced many older shoppers to buy online regularly for the first time. As lockdown loosens, ParcelHero says internet retailers must do their best to retain baby boomers’ custom and permanent changes should be made to sites seeking the grey pound.

One positive result of the national lockdown has been that increasing numbers of older shoppers have jumped online for the first time. The UK e-commerce expert ParcelHero says over 65s spent 94% more on home deliveries this April than they did last year, and that e-commerce retailers need to lock-in lockdown changes now, to ensure they retain this huge new customer base.

ParcelHero’s head of consumer research, David Jinks MILT, says that many of the baby boomers generation (born 1946-1960) have now retired but retain considerable spending power, and e-tailers need to learn the lessons of lockdown to retain their custom:

‘Many pensioners were forced into using the internet to purchase groceries and goods when lockdown hit the UK on March 23rd. Even before the government closed non-essential high street stores, many friends and relatives had set up new accounts for older people with little experience of shopping online, and even practised ordering with them.

‘There’s a wealth of data building up showing just how dramatic the growth of online shopping has been amongst senior citizens, as the lockdown took effect. A startling 54% of over 65s shopped online this April, according to the Office of National Statistics (ONS) as opposed to just 22% a decade ago, and that number is still rising rapidly as older shoppers get to grips with the technology and discover the convenience of shopping from home.

‘Research from Kantar Worldpanel showed over 65s spent 94% more on supermarket deliveries in April this year, during the lockdown period, than they did in April 2019. That’s not surprising, as AgeUK reports older shoppers have responded to reserved delivery slots for OAPs and the increased uptake of home deliveries from pharmacists. Mintel, the market research agency, found that 37% of over-65s have increased the amount of online shopping they do since the outbreak started.

‘These numbers add up to one thing: a significant new consumer base for online stores has been created almost overnight. The question now facing online retailers is: how do they keep this initially reluctant customer base hooked on home shopping once lockdown is loosened?

‘ParcelHero’s research reveals strategies that can be adopted to encourage loyalty from older shoppers. Focused offers, user-friendly Apps and simpler, cleaner web design can all play their part in stores retaining the grey pound.

‘Companies such as Waitrose have concentrated on developing an easy-to-use App for tablets – many older shoppers’ most favoured device. Elderly customers have left feedback saying, ‘Shopping with the app is much easier than from the website.’” For those stores not offering Apps, however, there is still plenty they can do to ensure their site does nothing to put off older users:

  • Don’t use small font sizes or elaborate fonts, as older people’s eyesight may not be perfect. Similarly, ensure good contrast between font colour and background colour. For example, use black font against a white background, rather than light blue on dark blue
  • Ensure “calls to action” such as ‘Buy Now’ boxes stand out clearly
  • Avoid complicated dropdown menus
  • A progress bar showing each stage of progress of a purchase helps keep older consumers orientated. Include obvious “Back” buttons
  • Feature reassuring badges/logos and wording to give confidence to inexperienced buyers. For example, if your business belongs to a professional association or is ‘Buy with Confidence – Trading Standards Approved’
  • Offer quick and simple ways to shop such as 1-click, or “Repeat previous order”
  • Include more explanatory and descriptive text. Elderly online shoppers read content thoroughly, while younger consumers are more likely to skip to main information
  • Ensure your site is responsive. In 2017, 48% of UK over 55s owned a tablet.

‘There are two more steps online stores can do to retain the custom of older shoppers. Firstly, don’t be in too much of a hurry to continually update your site once it is customised to your target customer profile. Older shoppers are more likely than other age groups to make written notes of how to navigate and purchase on a site and refer to these regularly when shopping. Changing the look and functionality of your site may lose their loyalty and they may either switch to another online store they have valid notes for, or simply return to the high street post-lockdown.

‘Secondly, if your company has an omnichannel approach to retail, with both high street stores and a website, ensure you offer easy click & collect options once the lockdown has ended. Older shoppers often enjoy physically shopping as a leisure activity, to socialise with people and get out of the house. But they like knowing in advance that their chosen product will be in stock; click & collect is ideal for this.’

 

May 19, 2020

Chocolate factory looks past Covid-19 to Christmas with Lloyds Bank support

A chocolate producer whose products are enjoyed by visitors to tourist attractions throughout Europe, has secured a six-figure funding package from Lloyds Bank to help continue its operations during the COVID-19 outbreak.

Calico Cottage, based in Haddenham, Cambridgeshire, was established in 1989 and sells fudge-making systems to customers across the UK and Europe. Its sister company, The Cambridge Confectionery Company, manufactures and sells handmade chocolate from a second factory in Cambridgeshire.

The firm’s products are also sold in a wide range of outlets from garden centres and farm shops to gift shops.

Due to the UK-wide lockdown imposed by the government, many of the retailers that sell confectionery products are currently closed, affecting Calico Cottage’s cashflow. Meanwhile, with June normally the time when the company begins production ahead of Christmas, it required funding support.

The business is however well placed to offer its customers flexibility in supply when they re-open. This will be essential in an unpredictable retail climate should customers be nervous about holding large stocks and placing orders months in advance of Christmas.

Nigel Baker, managing director of Calico Cottage, said: “We’re all experiencing and living through an extremely unusual set of circumstances. Many of our seasonal customers are closed or operating a reduced online offer. As a manufacturer of chocolate and fudge making ingredients, we rely on income from people visiting shops and seasonal peaks like Christmas.

“Thanks to the quick response and support from Lloyds Bank we now have the flexibility to start focusing on long-term orders, including Christmas, and ensure that we can hold stock whilst working with customers to help them re-start and plan for Christmas. Having this support has been invaluable and we can now start preparing for what we hope will be a busy end to the year.”

Alongside the six-figure funding package from Lloyds Bank, via the Coronavirus Business Interruption Loan Scheme, Calico Cottage has agreed a six-month repayment holiday to support cashflow.

Stephen Clarke, relationship manager at Lloyds Bank, said “The current lockdown has had a huge impact on businesses that rely on the footfall and sales of customers to secure income.

“For manufacturers like Calico Cottage, working months in advance is the norm, but they need to have a healthy cashflow in place to plan ahead. We are supporting businesses like this to ease the impact on their income during this challenging time, enabling them to continue trading and planning for the year ahead.”

May 19, 2020

Silent streets under lockdown – BRC-ShopperTrak Footfall Monitor

Covering the four weeks 5 April – 2 May 2020

  • UK footfall decreased by 84.7% in April, due to the mandatory lockdown. This was a record decline for the industry that has seen unprecedented challenges during the month.
  • Footfall on high streets declined by 81.8% year on year. They fared better in comparison to shopping centres, as local convenience stores saw a rise in popularity.
  • Retail parks saw footfall decrease by 62.4% year on year. Thanks to wider open spaces in comparison to other locations and a higher proportion of supermarkets helped to shelter retail parks from a steeper decline.
  • Shopping centre footfall declined by 87.8% year on year. They were the most negatively affected location, partly due to enclosed spaces making social distancing more of a challenge.

Helen Dickinson OBE, chief-executive of British Retail Consortium, said:

“As expected, lockdown has dramatically cut footfall traffic across retail locations, with the majority of physical stores closed to the public. The fall has been slightly less dramatic in retail parks where a high proportion of supermarkets and other essential stores have remained open, slightly mitigating the overall reduction in footfall.”

“With lower footfall likely to continue, along with a corresponding fall in sales, and with demand likely to remain low, many retailers will not return to normal trading for some time, even when they are allowed to reopen. We will see an acceleration of many trends seen prior to the coronavirus pandemic – lower footfall as many consumers choose to browse digitally, and a corresponding rise in online sales. These changes are requiring retailers to adapt quickly so that the industry can meet the needs of modern consumers and deal with the challenges the pandemic is presenting. Ultimately, the very nature of many retail jobs will change, with impressive customer service and the effective use of technology becomes even more vital.”

Ian Muir, general manager UK, MEA & India of ShopperTrak, said:

“With all but essential retail closed during lockdown, last month’s lacklustre footfall levels were inevitable. Looking ahead to June and the gradual and measured reopening of shops, retailers will need to navigate a new, and potentially long-lasting, era of cautious consumerism.

“Retailers will now be required to deliver in-store experiences that are both safe and frictionless; safety will need to be reassuringly visible but executed as seamlessly as possible – a feat that is only achievable through combining engaged store associates and well-applied data. Achieving these newly accelerated demands on the store will be key in reassuring shoppers and regaining footfall into the future.

“Evidence of this new cautious consumerism can be seen in Germany’s footfall figures, with the reopening of its retail stores starting in mid-April. German footfall at the beginning of the month (week 15) was down at -98.3% year-on-year, but by the end of April (week 18) it had improved by 10.7 percentage points to -87.6%. While shopper traffic was still down, these green shoots of slow retail recovery may indicate what lies ahead for the UK.”

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