2020 has been one of, if not the, toughest year’s for retail. With many non-essential retail stores forced to close during periods of the year, this led to consumer spending changes with many consumers starting to shop online or more locally. In this article, we summarise some of the changes 2020 has brought to the retail sector.
Independent shops see a sales increase
Despite the fact that the retail sector saw a sales decrease in 2020. Britain’s independent retailers saw a sales increase. The Covid-19 pandemic caused consumers to shop at their local high street instead of large city centres. Barclaycard data indicates that spending at independent food and drink stores increased by 28.6% in 2020 compared to 2019.
Department and clothing stores hard-hit
Whilst essential spending increased by 4.1% compared to 2019, non-essential retailers endured a tough year with non-essential spending decreasing by 11.3%. This affected department stores and clothing stores in particular. This data comes as no surprise since non-essential retail was forced to close for lengthy periods in 2020 and unfortunately, led to financial problems for some well-known retailers such as Debenhams and Arcadia.
DIY Spending increased
During 2020 we all spent more time in our homes than we typically would have leading to an increase in DIY and furniture spending as many people decided to make home improvements. DIY and home goods stores reported a spending increase of 9.8% for 2020. Whilst furniture retailers saw a 5.3% increase in spending.
Consumers treated themselves more during lockdown
UK consumers treated themselves and others more this year with a spending increase of 22.7% at florists, 9.8% on crafts and hobby, and 10.7% on vet and pet retail this year.
Which consumer trends are likely to last beyond the covid-19 pandemic?
Whilst the economic outlook remains uncertain, the acceleration of digital adoption that we have seen due to the pandemic this year is certainly going to have a significant and lasting effect on consumer trends/ behaviour. The retailers that adapt to digital adoption and consumer trends will most likely succeed and possibly come out of the pandemic stronger.
Customers are now using more card and contactless payments in stores to avoid/ reduce physical contact of cash. When the pandemic began in March the decision to increase the contactless spend limit to £45 was made and implemented on 1 April to reduce cash payments.
How can we help?
At Hawsons we have a dedicated team of specialist retail, wholesale, and E-commerce accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services that are tailored to meet your individual needs. Our understanding of the issues faced by the retail, wholesale, and e-commerce sector means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.
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