Research Results: Impact of COVID-19 on the UK Consumer Sector

    View Authors March 2020

    More Than Half of Retailers Battle Supply Chain Disruption as One in 10 Consumers Stockpile

    The coronavirus disease 2019 (COVID-19) was first discovered towards the end of December 2019 in China. Working with our colleagues at consultancy Retail Economics, our COVID-19 surveys were conducted between 28 February 2020 and 1 March 2020.

    Our findings were published on 4 March 2020 and aim to keep you up-to-date on the current trends in consumer behaviour concerning the virus and how the sector is responding to the potential ramifications should the outbreak persist.

    Please download the summary of our findings. A full version of our joint report with Retail Economics is available, please contact Daniela Douse for a copy of the report. Our research results have featured in The Telegraph, The Guardian, Retail Week, Retail Gazette and City A.M. to name a few.

    Key Findings

    Significant Supply Chain Impact

    More than half of retailers surveyed have already experienced supply chain issues as a result of COVID-19.

    Almost a quarter (24%) of retailers surveyed – including food, fashion, and health and beauty businesses – say that supply chain disruption is having a significant impact on their businesses. Yet only 7% of them have flexible enough supply chains to be able to switch suppliers.

    Retailer Sales Hit

    Above supply issues, retailers are most concerned about the damage the virus could have on consumer confidence. Almost half (45%) of retailers surveyed have seen a negative impact on sales already, while three-quarters (75%) of them expect a negative impact on sales if the virus persists.

    More Sacrifice Holidays

    There is now a greater willingness to sacrifice holiday plans. More than a quarter (28%) of people are currently avoiding travel abroad, which could rise to nearly half (45%) of consumers if the virus persists. Given that UK households spend around £2,200 on holidays abroad per year (according to the Office for National Statistics [ONS]), this could put £25 billion at risk of not being spent on travel overseas.

    Four-fifths Have Not Received Guidance Over Sick Pay

    With the UK government claiming that up to a fifth of the workforce may be off sick during the peak of a coronavirus epidemic, it is troubling that 86% of consumers claim they have not received guidance over sick pay.

    Almost half (48%) of consumers said their employer has not sent any advice around what to do in the event of staff being suspected of carrying the virus. However, our retailer survey suggests that the sector has been much more proactive with guidance for their workforce. Indeed, 93% of retailers have produced guidance for their employees regarding the virus.

    Matthew Lewis, head of Retail at Squire Patton Boggs, says:

    “Maintaining an effective supply chain and an operational workforce is critical to retail and to the long-term health of the sector and the wider economy. The most staggering result shows that just under 45% of retailers and those operating in the supply chain do not have the option to switch suppliers to mitigate against the impact of COVID-19. This raises serious concerns about business continuity. It is not too late, and retailers should look at their supplier contracts.

    “While it is comforting to see that more than 90% have produced guidance for their staff, this message may not be getting through to employees, as almost half of consumers indicated that their employer had not sent advice regarding what to do in the event of employees being suspected of carrying the virus.

    “Employers will know they have a duty to ensure the health and safety of their employees and members of the public. They should be taking action to ensure they can maintain operations while, at the same time, protecting those who are potentially at risk. The situation is rapidly changing, and retailers and those operating within the supply chain should ensure they stay up-to-date with the latest guidance and advice from public health agencies.”

    Richard Lim, CEO at Retail Economics, says:

    “Retailers are battling against significant disruption to supply chains, as COVID-19 has choked off production in China. While the impacts may not yet be apparent on shop shelves, around a third of retailers suggested that ‘continuity of supply’ is currently their biggest concern.

    “Of even greater concern for other retailers is the impact on consumer confidence and the effect this will have on their behaviour.

    “The proportion of consumers currently avoiding international travel, using public transport and going to shopping destinations has risen sharply over the last two weeks. Almost half of consumers say they will avoid international travel if the virus persists, while a third will avoid public transport and a quarter will avoid retail destinations.

    “What is more, consumers are also increasingly nervous about access to essential items, with one in 10 shoppers confessing to stockpiling goods.”