Time for retailers to take stock
The UK’s retail sector has been fighting some prevailing headwinds for some time, as overheads increase, the move towards online shopping gains momentum, and footfall for bricks-and-mortar stores declines. Against this backdrop, the Coronavirus (COVID-19) pandemic could not have come at a worse time: the lockdown kicked in just as the retail sector was about to hit its peak sales season, starving it of a desperately needed boost to flagging profits. With COVID-19 only exacerbating the financial challenges that retailers were already facing, many were forced to close their doors for good as ongoing economic uncertainty whittled away at consumer confidence and spending.
A significant divergence in the impact on different retail sub-sectors
While the retail sector has been one of the hardest hit by the pandemic, one sub-sector has also emerged as one of its biggest heroes. Supermarkets have stepped up to the plate to feed the nation, keep customers and employers safe, and stay profitable in the process. However, there have also been some big swings by at sub-sector level, with growth in the food industry counterbalanced by a nosedive in non-food sub-sectors as consumers steer clear of buying discretionary items like furniture, clothing and homeware.
As the government begins to lift lockdown restrictions, the retail sector is now under pressure to take a long, hard look at how it can best adapt to the ‘new normal’ and the accelerating consumer shift towards online channels by fostering resilience, capitalising on growing customer trends and implementing different business models. In the post-COVID landscape, retail businesses with the foresight and agility to seize this opportunity for change stand to emerge from the crisis more resilient – and more profitable - than their peers.
How we can help
Our retail sector team works alongside businesses and their financial stakeholders to support them with the high-calibre, specialist advice they need. Backed by our combined experience, collective insight and deep sector knowledge, we pride ourselves on acting quickly and independently to deliver the best outcomes for our clients.
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For more insights into challenges and opportunities facing the retail sector, take a look at the links below, including our latest webinar:
Retail, food and beverage sector: Can restructuring leases reinvigorate the high street?
Experts from our restructuring and insolvency team, Andrew Andronikou and Brian Burke, were joined once again by Vernon Dennis from Howard Kennedy and David Abramson from Cedar Dean to discuss what we have been seeing in the market. The panel cover the myriad of challenges businesses and their advisers in the retail, food and beverage sectors are facing. Broadly, these include changes to current legislation and the winding-down of government schemes related to furloughed staff and those being made redundant.