26 BDO LLP | RETAIL FORECASTS REPORT 2021
RETAIL IN THE AGE OF COVID-19 CONTINUED
ACCELERATION OF ONLINE & DECLINE IN STORES
For many years, the shift towards online has been fairly predictable, with retailers attempting to reel in shoppers at a steady rate online. This is to validate investment in a channel that has widely struggled with operating profitability and allow them to gradually rightsize their store portfolios. However, COVID-19 has now suddenly brought forward development by approximately 3-5 years (i.e. GlobalData forecasts that online penetration will have reached a level it wasn’t previously expected to reach until 2023-2025). As lockdown began consumers were unable or unwilling to visit physical stores turned to online retail, often finding it preferable to shopping in stores, and now many plan to maintain these habits long term, having become accustomed to the channel. While this has provided a huge boost to e-retailers, physical stores, having already suffered two decades of declining spend as expenditure has transferred online, are seeing another steep decline in footfall, leaving many shops unviable and necessitating large numbers of closures. Many retailers have had to radically overhaul their business by turning to dramatic solutions, such as pre-pack administrations, CVAs and requests to move to turnover-based rents. The upside of this trend is that those businesses which come through this period will emerge with business models much closer aligned to the more online centric/multichannel future of retail. They will also be able to focus on improving the customer experience in remaining stores. With fewer physical stores online and the rate of online growth set to slow compared to the previous decade, it should also become less challenging to run stores profitably.
YOY GROWTH %
Online retail
Offline retail
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
9.7 8.1 8.8 7.8 8.0
0.5 0.3
1.1
0.9 0.2
32.4
-11.1
1.6 1.5 4.9 4.6 4.4
4.0 0.7 1.4 1.7 2.0
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