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As a consequence of the COVID-19 coronavirus lockdown, tens of millions of Britons are now virtual prisoners in their own homes, officially allowed out for no more than a single piece of exercise per day or a trip to the supermarket. Almost every shop is closed and so for most goods, online retail will be the public’s lifeline for at least the next 3 weeks (though I suspect far longer).
For this reason, the UK government have explicitly excluded online retail from these closures and restrictions as can be read in paragraph 3 of this document. Specifically, this Ministry of Housing, Communities and Local Government paper states “Online retail is still open and encouraged and postal and delivery service will run as normal.”
ChannelGrabber, Cloud Commerce Pro and Cloud Seller Pro provide essential software and services necessary to enable online retailers to channel demand, manage listings, warehouses, stock and orders, billing, shipments and customer communications. We have long had an important role to play in enabling online retailers to scale and reach more customers through more selling destinations, but perhaps never more so that in the last couple of weeks and as a consequence of the rapidly changing business environment for conventional and online retail.
In the last week alone, we have seen a surge in online sales by many of our customers. We wanted to understand this sudden and dramatic change and share our conclusions with existing retailers and perhaps those of us who are considering a move into online retail to help meet the increase in demand. We also hope that our analysis will help all retailers to better plan for the weeks and months ahead.
Our Data Source
Our analysis drew on week-on-week sales order volumes from our over 1,000 multi-channel retail customers. We profiled the top 100 performers based on their growth and the bottom 100 performers based on their contraction.
Product Categories Experiencing Growth
With the prospect of long-term confinement to house and garden and with the closure of schools, the public have clearly turned their attention to entertaining themselves, keeping busy and keeping fit:
20% of the top performers sold goods in the home, furniture and DIY category with all sub-categories performing well. Certainly furniture and homewares are booming but there are a lot of retailers in this space so given the timing, their dominance is unsurprising. Those retailers selling sporting equipment – particularly home gym equipment are doing extremely well ever since gyms have been closed and those interested in keeping fit are keen to maintain their fitness from home.
Every other category that is experiencing strong growth involves products that will occupy peoples’ time and make life in confinement more pleasurable.
Product Categories Experiencing Contraction
There is a greater concentration of retailer types amongst those experiencing order volume contraction:
Again, clothing and apparel retailers make up a disproportionate quantity of the total and so it is unsurprising that they make up the largest group within those retailers who are struggling.
The Winners and Losers – Growth and Decline by Category
Next, we wanted to understand which categories were growing and contracting the most. The interesting and encouraging point to note is that the top performers are growing to a far greater extent than the bottom performers are contracting. Overall, those of our customers who are experiencing growth have grown by an average of 74% whilst those who have contracted have done so by far less – 32%. The average order volume growth across all of our customers is a healthy 27% which is close to the level of growth seen during the pre-Christmas peak:
Amongst the strong performers, sporting goods, crafts and toys and games can be explained by the anticipated need to occupy one’s mind and body whilst confined to the house or garden. The increase in pet supplies may lend itself to some panic-buying or a switch from physical retail to online – hard to say as pet supplies shops are amongst those which remain open. There’s clearly an interest in using the time at home to get those DIY jobs done as well as making the house more comfortable and habitable and whilst some personal item categories as faring less well, health and beauty (with an emphasis on health here) has shown strong growth.
To reiterate, the declining categories are doing so to a much lesser extent – a positive amongst a broader negative set of data. The grocery contraction affects only a relatively small portion of our customers and they tend to be in speciality foodstuffs rather than mainstream – which is of course well-supported by the supermarket chains and local food shops which remain open.
The home, furniture and DIY retailers and those selling health and beauty products who are suffering are either in speciality home wares or beauty products so I don’t think there’s a broader trend here – these sectors are doing well in the mainstream.But there can be no doubt that the clothing and apparel and outdoor and leisure markets have taken a substantial hit. With the closure of the highstreet clothing retailers, those who can will doubtless put all of the demand generative resources into finding customers for their online stores so this market will no doubt be very competitive. But many of our customers are speciality or own-brand clothing sellers so we hope that they will fare better. Though clothing sales will doubtless decrease overall as people stay home, demand for the category is unlikely to collapse entirely.
We can see no reason why the outdoor and leisure category will not be hard hit. As we enter British Summer time, they should be experiencing a surge in sales but it seems we are set for at the very least a very long spring at home and it is hard to imagine that this will be a summer like any other.
We will keep monitoring the trends and share any significant changes with our customers and readers. Once again, UK Government policy is changing daily and we may yet see further tightening of restrictions on individuals and businesses so we will provide further updates here as appropriate. In the meantime, we advise all of our customers to monitor the Government guidelines for employers and businesses which can be found here and of course, please pay close attention to the personal health advice which can be found on the NHS website here.