Reports of long queues outside shops across the country was the news retailers wanted to hear as they reopened after the coronavirus lockdown.
Boris Johnson urged people to ‘shop with confidence’ as all outlets previously deemed non-essential were allowed to resume trading again from today.
Investors, though were more cautious and shares in Next PLC (LON:NXT), Marks & Spencer PLC (LON:MKS) and Primark owner AB Foods (LON:ABF) all eased lower in spite of today’s rush.
One area of concern is that shopping will be a very different experience from three months ago.
Two-metre social distancing measures are compulsory, perspex screens are in place at the tills while returns policies have also been changed.
These safety measures are designed to reassure customers and staff, but it is not only how confident people generally are about going into shops that is a worry.
How they feel about their financial situation in the face of gloomy economic forecasts is another major challenge.
Britain’s GDP is forecast to slump 8% in 2020 after a dire April, when lockdown restrictions saw business activity crash by more than 20%.
VAT holiday
The queues this morning will have encouraged retailers that shoppers are willing to come back, but the trade body is still warning that many shops will go out of business unless more financial help is forthcoming.
Helen Dickinson, chief executive of the British Retail Consortium, wants a temporary reduction in VAT, something reports this morning suggested the government is considering.
“The reopening of non-essential shops from today is unlikely to deliver immediate relief,” said Dickinson.
“The government should consider options to stimulate demand, such as a short-term reduction in VAT or a temporary income tax cut for lower-income workers,” she said yesterday.
Many commentators believe the virus will hasten the demise of chains and brands that were doomed even before the virus outbreak.
Footfall to drop 50%
A structural shift online has accelerated with people being locked at home.
Online's share of even the hitherto resistant grocery market has jumped to 11% from 5% a year ago, according to Quilter Cheviot.
Amisha Chohan, retail equity research analyst at the wealth manager, said: “We expect footfall to be down c.50% when stores reopen, but conversions and average basket size to be higher due to pent up demand.
"While footfall should gradually increase as consumers become more confident about leaving the house, high promotional activity, however, may offset gains in the apparel space, as retailers' race to reduce their stock levels.
“Social distancing queues may yet still deter consumers from heading back to the shops over the coming weeks and so we expect footfall to remain below pre-COVID-19 levels for some time yet.”
Shares in Next dropped 1% to 4,983p, M&S 0.4% to 105.3p and AB Foods 0.6% to 1,916p.