News & Views - Savantor

Coronavirus and its impact upon spending behaviours

Saturday, 16 May 2020

The lockdown imposed on the UK public on 23rd March, as well as self-imposed decisions to minimise travel outside the home in the preceding days, have inevitably had a massive impact on our spending habits.

According to the Office for National Statistics (ONS), retail sales in the UK dropped by a record amount in April, falling by 18.1%.

Clothing sales halved as many High Street shops were shut under the lockdown measures but online shopping as a proportion of all retail reached a record high of 30.7%, according to the ONS.

All types of shop, other than those selling clothing or household goods, saw record amounts being spent with them online, however the increase in online shopping did not offset the collapse in High Street spending.

The fall in non-food sales in April resulted in the lowest levels of clothing and shoe sales seen since the ONS started collecting the data.

In April, the proportion of online spending on food increased from 5.7% to 9.3%; off-licence sales also continued to increase, seeing a slight rise after a 23.9% jump in March. Total grocery sales rose 14.3% during the three-month period to 17 May, the fastest rate since 1994.

The shift in demand to online shopping has clearly identified those companies with the most robust e-commerce operations as retailers have struggled to cope with online demands. Online grocery retailers in particular found that their online services have been subject to unprecedented demand.

The latest grocery industry figures also show a marked change in shopping behaviour by consumers during the high street lockdown, with small local shops benefiting alongside online retailers. Corner shops and independent grocery stores have reported a 63% increase in trade as shoppers have turned to local outlets. 

The number of shoppers visiting UK High Streets, retail parks and shopping centres fell at its fastest rate ever in April as the lockdown forced people to stay indoors, with footfall decreasing by more than 80% according to industry figures. This was almost double the level of March's downturn when there was a 41.3% drop in visits to shopping locations.

Whilst it is unlikely that the increase in online shopping will be sustained at these levels once restrictions on movement begin to be lifted, nevertheless it has probably accelerated the move towards online which was already in process. Grocery retailers in particular have gained new customers, many from the older demographic of the population – they may well continue using these services in the future.

One other major change in shopping behaviour resulting from the lockdown has been in the use of cash. For both practical and perceived hygiene reasons, cash usage in the UK has changed radically, with ATM withdrawals falling 60% during the lockdown and 75% of UK consumers reporting that their use of paper money is down. 

Prior to the pandemic, cash was very much under attack as a payment method, with various industry initiatives to try and ensure that it remains an option for the various sectors of the population that rely on it. Just how much the current decrease in cash usage remains a permanent trend post-lockdown and the impact this has upon continuing to support it as a means of payment will be interesting to see.

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