Business

How Covid-19 Affected the Retail Industry

How Covid-19 affected the retail industry

Covid-19 has caused all sorts of problems for the retail industry. 2020 saw total retail sales fall by 1.9 per cent from 2019 – the largest annual fall on record. With lockdowns and self-isolation there was much less opportunity for physical shopping. Plus, there was less room for luxury purchases with the financial uncertainty of the pandemic. Below, we explore how Covid-19 affected the retail industry.

E-commerce takes over

One of the main trends was that online shopping became much more popular. In 2020, 15.8 per cent of purchases were classed as distant sales – a total which has doubled over the last six years. Across all areas of retail, it’s now become more and more accepted to purchase goods online rather than through trying them out in a store.

Gig economy

Part of this shift towards e-commerce has been facilitated by the rise of the gig economy. The gig economy refers to jobs of a limited duration such as delivery drivers, freelancers or fixed-term contractors. With these temporary jobs on the rise more and more people are staying at home for work and making purchases online. The result is that the demand for courier drivers and other delivery work has increased hugely, and e-commerce is becoming a bigger force in retail.

What are people buying online?

But what are the online retailers that are benefitting most from the shift towards e-commerce? Clothing is one of the main areas that has boomed online. In fact, UK online clothing sales are expected to overtake in-store purchases in 2022. And consumer surveys suggest that this is likely to become a permanent change. The upshot of this is that online-only clothing outlets will benefit hugely in the shift of emphasis, while physical-only stores will find it incredibly difficult to adapt.

Reports also suggest that charities have benefitted from the switch online. Research from Shopiago indicates that UK charities have sold 185 per cent more items online in the six months to August 2021 compared with the year before. Part of this is because consumers have searched through online marketplaces such as eBay more during the pandemic, and it’s brought them closer to charities’ offerings online.

Subscriptions to online services are also booming too. Spotify, Netflix and others have all increased their market power during the pandemic and alongside them, it could benefit retailers who make speakers and other items that work well with subscription packages.

Covid-19 has dramatically altered the retail industry. Online purchases are now dominating retailers and it’s had many knock-on effects. From an increase in delivery drivers to fewer sales for physical outlets, the pandemic has changed the face of retailing.  

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