Covid-19: £12.6bn will be wiped from UK retail spend in 2020

Coronavirus continues to severely impact retail, from supermarkets dealing with the impact of panic buyers and non-food stores closing up and down the high street. But the negative financial impact of Covid-19 is predicted to be in the region of £12.6 billion.

According to GlobalData, the retail industry can expect £12.6 billion to be wiped from UK sales this year – this is the same amount Aldi recorded in sales for the whole of 2019.

GlobalData based its forecast on the pandemic peaking in the UK in April, expecting most stores to be closed or severely affected until late May. The research company does not expect normal spending patterns to resume until October 2020.

“While the food and grocery market will grow at 7.1% – the fastest rate for decades – this will not stop the overall market falling as non-food spend is forecast to drop by 8.9%,” explained Patrick O’Brien, UK retail research director at GlobalData.

  • Food and grocery: +7.1% (previous 2020 growth forecast :+1.2%)
  • Clothing and footwear: -20.6% (previous 2020 growth forecast: +0.6%)
  • Total retail market: -1.7% (previous 2020 growth forecast: +2.0%)

“The impact on non-food is far worse even than during the financial crisis of 2009, when sales fell 2.9%. Clothing and footwear sales are forecast to be hit hardest – with sales down over 20% on 2019.” O’Brien said this was due to its non-essential nature of clothing and “the eliminated need for new clothes as the public avoids social interactions and many self-isolate”.

“This will cause the spring/summer season to be a write-off for apparel players,” he said.

“Retailers will be forced to cancel (as Primark has already done), postpone or redesign orders to avoid significant levels of terminal stock loss in June and July. We expect to see several fashion retailers collapse into administration as a result, with the sector already in a vulnerable state. Although the online channel will remain accessible to shoppers, we still expect to see a sharp decline in sales here as no amount of spare time at home to browse online will compensate for the lack of events to wear new clothes for.”