As Covid rules ease, retail revival begins

This article originally appeared in our May 2021 issue – download a free copy here.

Shoppers flooded high streets and shopping centres as the easing of lockdown restrictions began in April, and fine food independents are poised to benefit from the fresh resurgence of retail.

In the first week of the reopening of non-essential retailers and outdoor hospitality in England and Wales, footfall in UK retail destinations rose by nearly 88%, with high streets clocking growth of 93% and shopping centres even higher at 127%. Despite bad weather and the fact that Scotland and Northern Ireland remained in lockdown at the time the data was recorded, footfall saw enough of a rebound to come in at just a quarter lower than 2019 pre-pandemic levels.

Bricks and mortar shops are making a comeback, but will this momentum be sustained? “We expect this rebound to continue,” confirms Nick Brackenbury, co-founder of retail tech firm, NearSt. “People want to get back out and shop, and many have saved a great deal over the lockdown that they’re now looking to spend.” Indeed, IGD’s latest Shopper Confidence Index found that consumers are focusing on quality in food and drink as higher earners now have more disposable income to trade up for premium products.

The return of discovery

While the largest rises in footfall were seen in Central London – an area that had lost its typical buzz during the UK’s successive lockdowns as fewer commuters travelled in – regional cities and smaller towns also saw significant growth in shopper numbers. Across the board, consumers appear to be ready to get out into shops again. “I think people have really missed the ability to be both inspired and surprised by what’s in their local stores, and the social shopping experience that comes with it,” Nick tells Speciality Food.

“Algorithms can be effective at suggesting more of the things we’ve already looked at online, but the personal recommendation that’s a bit unusual but turns out to be really interesting is what local stores can uniquely deliver.”

New product discovery and exceptional customer service are areas that are at the heart of what fine food retailers do, and they will be a part of the retail experience that shop owners are keen to revive over the coming months as restrictions continue easing. Retail analyst Nelson Blackley predicted that in the short term, retail would remain somewhat subdued due to the prevalence Covid-19 – but the desire for social shopping would soon outweigh consumers’ fears.

“Longer term, I am convinced most people will eventually return to shop in stores because they crave that human connection,” Nelson says. “This social aspect of shopping (whether the marketplace or the meeting place) cannot be underestimated as it’s been central to our town and city centres since Greek and Roman times.”

As the customer experience improves and consumer confidence is strengthened, the fortunes of small, independent retailers are expected to improve. According to data from the Federation of Small Businesses (FSB), nearly six in 10 (58%) small businesses said that they expect their performance to improve this quarter. This was the highest proportion of respondents since the summer of 2015.

Supporting local

Independent businesses are set to be central to the retail recovery. According to research by Cornerstone Tax, more than half of shoppers – 53% – will support independent traders and shops. Recent research from Barclaycard Payments showed that independent food and drink retailers have already felt the benefits of this support, with shoppers spending an extra 63% at food and drink specialist stores, such as butchers, bakeries and greengrocers, in February compared to the previous year.

Meanwhile, nine in 10 people who shopped locally during the pandemic said they would support smaller and independent businesses after restrictions eased as well. “All the research shows that there will be a myriad of resilient founders and entrepreneurs to support, new businesses to look out for, and a British public ready to back them all – particularly those local independents so important for our communities and our economy,” said David Hannah, principal consultant at Cornerstone Tax. “This truly shows we are a nation of shopkeepers.”

Food retail sees continued growth

For food and drink retailers, marking the one year anniversary of lockdown meant confronting the record-breaking grocery sales of 2020 and discerning what this will mean for sales once Covid restrictions are fully lifted.

As IGD’s data shows, consumers are increasingly focused on high-quality food, whether that is because they discovered the difference after making the switch during the lockdown panic buying rush or because they are spending their typical hospitality budget on at-home dining and are keen to continue treating themselves.

But although shoppers made 117 million fewer trips to the supermarket in March 2021 versus March 2020, when panic buying peaked, grocery spending remains “considerably higher than pre-pandemic levels”, according to Kantar.

“While grocery growth has slowed against 2020, sales are still much higher than the same 12 weeks in 2019 – up by 15.6%,” says Fraser McKevitt, head of retail and consumer insight, at Kantar Worldpanel Division. Combined with the growing focus on supporting local and the desire for premium food and drink, this spells a recipe for success for speciality food retailers.