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The COVID-19 pandemic in 2020 has led to the closure of hundreds of brick-and-mortar stores in the UK. How does this affect retailers' market forecasts for 2021 and beyond?
To find out, the GLG survey team, the world's leading expertise-sharing platform, conducted an online survey to evaluate retail sales results for Christmas 2020, which covered sales channels (online vs. offline), product categories, overall confidence levels of year-over-year retail sales, and the impact of initiatives such as clicks and collections. This article will interpret the research results one by one, hoping to provide professional data reference for business friends to compete for the Christmas market share in 2021.
1. Investigation
From 23 December 2020 to 8 January 2021, GLG's research team was active among the UK's brick-and-mortar retail giants.
Second, the surprising harvest
Many feared lower sales during The 2020 Christmas shopping season, but the results weren't as bottomed out as expected. 60 percent of respondents said their company eventually met or even exceeded their annual total sales target, and only 37 percent fell short of it.
More than 67 percent of respondents to food companies said their performance was even "slightly better" than in previous years. Purchases of home office furniture have also surged. And as more people tend to upgrade their home office systems, electronic media retailers are selling "much better" (17 percent) or "roughly the same" (83 percent) than normal.
Third, profitability survey
Surprisingly, respondents said retail profitability was relatively strong compared to previous years' Christmas season, with 37 percent of respondents reporting significant year-over-year gross margin growth. Retailers are expected to raise prices during the pandemic and offer steep discounts to avoid overstocking, but the data has remained balanced in recent years.
Fourth, the comparison of sales channels
If you compare physical stores with online stores in more detail, the actual number of customers visiting physical stores will be lower. 90% of respondents said their company's performance fell by 1%-25% in the 2020 Christmas season. This had the biggest impact on the SOUTH-West, South East and Northern Ireland regions of the UK, with annual sales trends in brick-and-mortar stores falling by 70% overall.
Especially when the purchase traffic remained at 43%, the conversion rate dropped by about 50%, which is much more desirable than the expected results.
While sales in physical stores have declined, online sales trends have risen. Annual online sales trends are higher (67%) or roughly the same (27%) compared to 2019 levels. Seventy percent of respondents said their companies were roughly on par with physical store sales in 2020.
Relevant statistics include both clicks and favorites, and this statistical analysis method used for the Christmas shopping season will become more and more extensive. About 25% of respondents believe that this is a major choice, and 87% of respondents said that when they calculate the overall sales and profitability of online and offline in 2020, they will also count the clicks and collections of online stores for reference.
Overall, the majority of respondents said that Christmas sales and profitability in 2020 were better than expected, but fortunately there were no truly fatal extremes.
So, what do they think about the future of the industry?
5. 2021 Christmas market forecast
The survey results show that retailers have made positive forecasts for sales performance in 2021 and beyond. Specifically, 83 percent of respondents expect total sales to grow by 1 to 25 percent this year, while only 10 percent expect sales to decline in the future.
With the exception of the Home, DIY, Furniture & Appliances categories, sales in all other categories are expected to achieve year-on-year sales growth during the Christmas season.
Similarly, the majority of respondents expect online sales during the Christmas season to continue to grow in 2021, but the growth rate will slow, with 73% expecting growth to be 1%-25%. Surprisingly, 90% expect in-store sales to recover or even exceed pre-pandemic levels, with regions such as London, the North East and Scotland expected to be the biggest beneficiaries.
87% of respondents want to keep their offline stores, and 60% plan to achieve "moderate growth" in the number of physical stores by 2023, about 5%-19%.
The data suggests that retailers are making changes to deliver unique customer experiences: They are trying to diversify their product offerings and services (63%), increase store staff (47%) and available sales space (23%), and adjust store rent turnover fees (17%), hoping to add to the Christmas season in the late 2021 pandemic.
6. Summary
Retail sales during Christmas 2020 fell year-on-year compared to previous years, but the survey results showed that sales performance and in-store sales were much better than many people expected. Retail prices remained strong at normal discount levels, with clicks and collections in online retail stores growing significantly.
In addition, retailers are optimistic about sales performance in 2021 and are expected to exceed pre-pandemic levels. Most people predict that with the gradual lifting of the epidemic restrictions, online sales will continue to grow in 2021 (although the growth rate is lower than in 2020), physical store sales will increase significantly, and merchants will be confident.
As mobility increases, the majority of respondents expect the industry situation in the hospitality and fashion and apparel categories to rebound significantly and maintain the number of existing stores in 2021. Many respondents even hope to gradually increase the number of brick-and-mortar stores by 2023.
But to achieve this growth, respondents believe retailers need to address the pain points of the omnichannel customer experience. When merchants optimize the offline space of physical stores, provide customers with experiences that are not available online, and begin to anticipate tax and tax rate changes, physical stores will have a relatively level playing field with online stores, which will be an important signal to save the British high street.