Posted by Vicky Hernandez, Partner
What does the last quarter of 2020 hold for retailers? Some signs of hope perhaps?
It’s the September quarter day and an important day for retailers as, for many, the next quarter’s rent will be due to their landlords. However, as the Government recently extended its moratorium on the recovery of commercial rents until the end of the year landlords may not have high hopes of being paid today.
Predictions vary but, with the retail and hospitality sectors still suffering, some analysts suggest that if 50% of rents due were actually paid this would be a good result for landlords.
But amongst the ongoing gloom surrounding the high street there are some good news stories. Whilst many retailers are suffering losses (or at least diminished profits) some are bucking the trend and are either experiencing an upsurge in demand for their products or successfully embracing new technologies and ways of doing business.
The Kingfisher group (which owns B&Q and Screwfix) has recently announced that its pre-tax half-year profits were up by 62%. Similarly positive experiences have been reported by other retailers in the DIY and home improvement sphere; sales are up and look set to stay that way. It seems that lockdown and increased working from home have re-awakened a love of our homes and we’re all spending more on everything from big building projects to new soft furnishings. No doubt other retailers will be keeping a close eye on this trend and looking to develop product ranges that appeal to our changing spending habits.
We are also seeing an acceleration of the switch to digital first stores where the retail experience starts online and the bricks and mortar physical store is very much secondary. “Click and collect” (where customers order online and collect from a store) is not new but retailers are finding new ways of doing business from installing collection lockers and digital return kiosks to rolling out “scan and go” technology. Even those retailers who are suffering on the high street are reporting strong online trading results and many are starting to refocus their marketing to reflect this.
The next quarter will not be an easy one for retailers but the Christmas season is approaching and there is an opportunity to entice customers back. Savvy retailers know that we need to move on from pre-Covid19 times and find new ways. Whilst inevitably some will not succeed, I remain quietly hopeful that many will start 2021 battered but stronger and ready to face a new and exciting era in the world of retail.
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