The Bank of England has published its first official forecast since the onset of the Coronavirus pandemic, stating that it predicts the economic impact of the lockdown will be less severe than initially thought. It was originally estimated that the UK’s economy would shrink by 14% this year, however this has been revised downwards to 10% – still making it the largest contraction in a century. This blow has been softened by the fact many sectors have recovered faster than expected. Spending on clothing and household furnishings are now back to pre-pandemic levels, and consumers are continuing to spend more on food and energy bills than prior to lockdown. Though there are tentative signs of recovery, these remain turbulent times for Britain’s high street shops. What factors are shaping the future for them? We explore in detail.
Facemasks in shops – economic friend or foe?
On the 24th of July face coverings became a legal requirement in shops, with Health Secretary Matthew Hancock stating that he hoped that this would give consumers the confidence to return. The preliminary data on this is somewhat mixed. According to retail analyst Springboard, in the weeks leading up to the introduction of mandatory masks, foot traffic was slowly but surely returning, with the week ending 25th of July being up on the previous week’s footfall by 4.4%. This was still however 38.4% lower than the same period in 2019, but the trend had been building towards more punters back in the shops. The first two days of mandatory masks saw footfall fall in England by 1.7%, but whether this will be an ongoing trend or was simply an adjustment period remains to be seen.
Eat Out to Help Out – will it make a difference?
Known to some as Rishi’s Dishes, the scheme which offers diners up to a £10 saving on their meal kicked off this week and certainly was not short on those willing to take up the offer. There were scenes of packed restaurants across the country, and more exclusive establishments such as Michelin star restaurants are now fully booked throughout August. It is high street restaurants that have been hardest hit by the Coronavirus, as consumers choose to avoid packed areas, with 15 national restaurant chains either putting themselves up for sale or appointing special advisors due to Corona. It is hoped that this measure will stem the tide.
Likewise, pubs have suffered from their total shutdown during the lockdown period, but the scheme does not include alcohol. However, dining al fresco is generally viewed positively by social distancing conscious diners, and pub gardens across the country were packed as the scheme coincides with the summer sunshine.
The cost of Corona – taking measures to meet the guidelines:
Smallbusiness.co.uk estimates that shops which have reopened are spending on average £615 to refurbish themselves to meet COVID19 guidelines which include instituting free hand sanitiser, PPE for staff, Perspex dividers, QR ordering, social distancing signage and other measures designed to limit contact. Some of these features will have a continued rolling cost, adding further economic pressures to a high street already operating on diminished margins.
The threat of local lockdowns and a second wave:
There are currently around 20 towns and cities across the UK subject to local lockdowns or increased restrictions, as Aberdeen was most recently added alongside Manchester, areas of Yorkshire, and Leicestershire. The local lockdown orders in some areas have entailed the closing of all indoor and outdoor hospitality venues including pubs, restaurants, and cafes. In Manchester, the restrictions have simply included not socialising with those from outside their households at social venues.
The loss of additional revenue in the busy summer months is a concern to small businesses across the country, and the threat of a second wave or increases in cases prompting local lockdowns may be discouraging potential customers.
A ray of light – shop local:
Despite a rather gloomy prognosis for the short-term future of high street retail, it has been reported by YouGov that shoppers are shunning large scale retail parks and big supermarkets in favour of shopping locally to avoid crowds, and many intend to carry on this trend long after Coronavirus restrictions have been loosened.
While the tentative signs of recovery are encouraging and government intervention offers some glimmers of hope for the high street, the overall picture remains uncertain. The best insurance against future disruption is to diversify the way your business accepts payments, whether in store by card or online via e-commerce, we provide great rates and fantastic products ensuring the cost of your card transaction is one less thing to worry about in these stressful times. Take a look at our great range of terminals to find out more.