On Monday, non-essential retailers in England will open their doors for the first time in 12 weeks. The coming month will give an indication of consumer confidence and whether the recession we have now entered will be as deep as some fear.
Different countries have taken different approaches to phasing out lockdown and in Europe, the UK’s death toll is rivalled only by those of Spain, France and Italy. These countries’ retailers have faced similar problems during lockdown, so what can we take from their initial retail performance as indications of what we might see in the UK?
Initial indications from Italy where retailers were able to reopen from 18 May saw actual sales performance exceed expectations. Nevertheless, sales on average were down 30 per cent for May compared to last year. In France, restrictions for retailers were lifted on 11 May. Sales performance was similar to Italy’s with year-on-year retail activity down 32.3 per cent for the month.
The Spanish data is less comprehensive. Following the lifting of restrictions in some major cities such as Madrid and Barcelona, high streets appeared busy with queues outside some stores. Notably, it is younger brands that appear to be performing best in Spain, albeit at lower than pre-lockdown levels. Brands such as Mango and Inditex have reported sales at 20 per cent and 30 per cent below pre-coronavirus levels respectively, whilst more mature brands like Massimo Dutti have reportedly fallen behind.
Jacqui Baker, Director, RSM says: ‘It is difficult to make a direct comparison with France, Italy and Spain as each nation’s easing of lockdown restrictions creates a unique economic impact. However, the experience of younger brands in Spain has its own parallel in the UK. The UK’s major winner of lockdown in the retail sector was Boohoo – which has seen exponential growth and investment during the period. Seemingly, it’s the younger consumer that feels less inhibited by coronavirus in terms of shopping habits.
‘With the hospitality sector still firmly in lockdown, the UK high streets have the added challenge of lower footfall, and as a consequence fewer opportunistic shoppers out and about. Furthermore, Spain, France and Italy have adopted a social distancing rule of only one metre. It remains to be seen whether the UK’s two metre rule will act as a handbrake on the UK’s recovery or whether people will start visiting non-essential shops.’