Retail overview – the past year

the past year in retail

In this piece, Mark Elward, CCO at Huboo comments on the past year in retail. Huboo is a Bristol-headquartered fulfilment technology provider which enables online retailers of all sizes to access a complete end-to-end fulfilment operation within minutes.

When we look back at the UK retail sector in 2021, the key themes, issues and news stories that dominated it were Brexit, which took precedence during the first quarter of the year as the new regulations came into force. The result was a fractious scene hindered further by delays at customs due to new documentation requirements for imports and exports. While ‘Freedom Day’ on 19 July came with big promises, and we saw some high street shops reopen after the lifting of Covid restrictions, it was sadly too late for others. Nonetheless, footfall flowed back to town centres with shoppers keen to resume normality.

During the summer and throughout the second half of 2021, retail was blighted by global supply chain issues. Displaced shipping containers, rising shipping costs, a shortage in HGV drivers and packed warehouses all contributed to what has been described as the ‘perfect storm’. The full impact of this is yet to be seen. It’s taken no mercy on the festive season and continues to wreak havoc during retailers’ peak trading period.

These are all issues that have directly impacted retailers, and therefore they’ve had pivotal consequences for consumers too. That’s arguably the reason why retail has dominated the news to such a significant extent. The empty shelves, higher priced goods and slower delivery times have had a very real impact on us all.

The transportation of goods across Europe and beyond has been a hot topic ever since Brexit policies came into force. Understandably, the ever-changing situation around Covid hasn’t helped either. It’s something that all retailers continue to monitor closely, especially if they’re operating primarily in physical stores and across international markets.

There’s no doubt that these issues have led to limitations and pressures that have bled through the entire supply chain. For example, at Huboo we’ve seen a rise in shipping costs, less warehouse space available, slower delivery times and in some cases, a lack of available stock. In many ways, this has hindered overseas sales in general. The international nature of both Covid and Brexit have had a wide-reaching impact on logistics and transportation, so it’s essential that businesses remain agile particularly in the unpredictable current climate.

Covid-19 has affected retailers in several ways this past year. With lockdown restrictions in place during the first half of the year, online sales continued abound. Upon the lifting of the rules in July, high streets reopened resulting in an uplift of in-store purchases, but a 2021 Black Friday event that didn’t match that of the previous year has left many feeling bleak.

Sector-wise, there have been clear signs of a shift in product popularity, with home furnishings experiencing continued high demand due to people staying at home to work throughout the pandemic.

This, coupled with large department stores retracting on the High Street, has led to the repurposing of huge high street stores into showrooms across Britain. Perhaps most prominently, Swedish homeware giant Ikea recently moved into Topshop’s former flagship store in London’s most famous shopping district, Oxford Street, amid much debate over its suitability.

We know that 2020 was a remarkable year for ecommerce; one in which the sector boomed. With high street stores closed, consumers increasingly turned to online shopping to make the vast majority of their retail purchases. As we moved into 2021, and as high street shops began to reopen due to the easing of lockdown restrictions, the online retail sector experienced a slight decline in sales. Overall, this impacted across the board. Forecasted sales for the UK retail sector in 2021 were around £132billion, which is a decline of £11billion across all retail from the past year.

Retailers should expect to see continued supply chain disruption in Q1of 2022 – at least. It’s likely there will be a level of uncertainty, especially given the ongoing situation around the new Covid variant, Omicron. Consumers and retailers will be hyper aware of the possibility of lockdowns, shop closures and travel restrictions, so there may be some hesitancy there, as well as continued inconsistencies in trends as we’ve witnessed throughout 2020 and 2021.

As the retail industry adapts to new regulations and supply chain pressures reduce, Brexit pains are expected to progressively ease. Exactly when that will happen remains unclear though.

Online retail is highly likely to continue as the channel of choice for the majority of purchases. For retailers exploring new marketplaces, enabling consumers greater access to their offerings is key to gaining market share, so having a suitable ecommerce offering is crucial to success in 2022 and beyond.