The coronavirus was something many people may have predicted, but no one could have expected the effect it has had on the globe as we entered a new decade. As it made its way across the world, it has left in its wake challenges, difficulties and a day-to-day life that has changed people’s expectations in this new reality. Here, RLI takes a look at some key countries on the map to see how Covid-19 has affected the country not just on a retail scale, but on a nationwide scale.
AUSTRALIA
Retail was already undergoing significant interruption and an ugly outcome for many, even before Covid-19 struck.The digitalisation of retail and a plethora of arrivals and expansions of international retailers, such as Muji, Uniqlo, Zara, Aldi and H&M,have contributed to a decline in department store sales and specialty chains of stores.The graveyard of stores who departed or significantly restructured include Harris Scarfe, Dimmeys, Bardot, Jeanswest, Rhodes and Beckett, Shoes of Prey, Payless shoes, Collette and Roger David. Now Covid-19 means that the virus not only impacts humans but is already starting to accelerate the demise of marginal, under-invested retailers or old business models lacking an innovation focus. It may also provide a lifeboat to some retailers as the rules of rents, subsidies and labour management allow a fast track to restructure. By 17 April, there had been 6,523 confirmed cases of Covid-19 and some 65 people had unfortunately lost their battle.
BRAZIL
The population’s high adaptability and lack of economic strength are two essential factors to understand the evolution of the new coronavirus crisis in Brazilian society and retail’s response to it. With community transmission throughout the country and numbers conforming to social distancing only at around 50 per cent, today, Brazil is facing a dilemma to find the balance between controlling the disease and maintaining economic survival conditions.The digital service channels took a leap.With malls and street stores closed, virtual marketplaces and freight transport companies saw, from day to night, their service capacity reach a maximum level.The big ecommerce giants in Brazil, such as Magazine Luiza and Mercado Livre, already well structured, skyrocketed with a demand from both consumers and small retailers interested in integrating their digital environment. Health products, supermarkets, beauty, and perfumery were highlights.At the same time, a second significant movement has emerged in Brazilian retail: the appreciation of neighbourhood commerce.
CANADA
Canada and the rest of the world continue to grapple with the health, social, and economic impact of the global Covid-19 pandemic. In short, the world has changed in the blink of an eye—and it has dealt another blow to Canada’s retail sector, an industry that was already facing significant challenges before anyone had even heard of Covid-19. The economic and financial impacts of the Covid-19 pandemic have fundamentally changed the outlook for retail spending. As Covid-19 cases began to climb in Canada, federal, provincial/territorial, and municipal governments ramped up efforts to contain the contagion. Many retailers reduced their hours or closed stores—or were ordered to do so. Self-imposed isolation depressed consumer demand for all but essentials. Unemployment jumped in March as some employers shut down or scaled back operations.
CHINA
The outbreak of Covid-19 in China brought widespread challenges to businesses across the country and these challenges had to be faced head-on. Now that the country is adapting to a new norm: post Covid-19. For example in fashion, this is something that is heavily invested in a successful Chinese recovery. Many brands are depending on Chinese consumers to pick up where they left off, and hopefully make up for lost sales in the West, where lockdowns continue.The industry is also observing how China rebounds, as it prepares for Europe and the US to reopen this summer. One early lesson from China is not to expect a “V-shaped” recovery. Wary consumers have so far not engaged in “revenge buying” in large enough numbers to make up for the shortfall during the lockdown, indicating there may not be as much pent-up demand for non-essential items as hoped. Internally China has a good control of the Covid-19 situation, with a very small number of new cases reported.The focus for the control of the virus has now shifted to the prevention of imported cases and the assessment of asymptomatic infection cases.
FRANCE
The coronavirus crisis first presented itself as a threat in January when LVMH and fellow French luxury giant Kering saw their shares drop by a combined £44bn. However as one of the world’s most visited countries with a diversified economy, France’s retail industry looks promising. E-commerce continues to grow for grocery retailers with an increase of 6.5 per cent on sales in value; however the picture is very different for physical retail with hypermarket sales down 13.4 per cent for hypermarkets larger than 7,500sq m in figures from last month. Facing an unprecedented increase in demand from consumers, who want to avoid food shopping in stores, food retailers are overwhelmed. As for non-food retailers, the effects of Covid-19 vary by sector. For example, some toy retailers have seen orders multiply by three, some even four times from when lockdown commenced, whilst DIY retailers are adapting to the situation by setting up contactless services allowing customers to order and take away essential products.
GERMANY
In mid-April, German Chancellor Angela Merkel discussed the easing of coronavirus restrictions with the Prime Ministers of the federal states and agreed on an exit scenario. From 20 April, all shops with less than 800sq m of retail space were allowed to reopen. The larger stores are prevented from doing so by the federal government until at least 3 May. Business leaders and economists complain that the square-metre limitation can hardly be justified and see it as unjust and legally questionable. Despite the reopening of business, the industry does not see the crisis as over in Germany. In the past four weeks alone, damage of around 30 billion euros has occurred in non-food retail. Many retail companies are on the brink of bankruptcy and are dependent on government aid.
INDIA
The country has now been locked down for more than four weeks. Fortunately, timely action, strict enforcement and conscious citizens has kept the impact of the virus fairly controlled (14,792 cases, 488 fatalities and 2,014 recovered – correct as of 18 April). The Government and administration have been very proactive as well as positively reactive.The industry bodies are being consulted and actions are taken wherever required. However, retailers are afraid of shutdown and bankruptcy.A survey carried out by RAI as well as CMAI (Clothing Manufacturers Association) indicates that more than 20-30 per cent of retailers will have to close their businesses in the absence of Government Support. Hopes for India are still bright compared to many other countries in the world, as the IMF has projected that India will still have positive growth of 1.8 per cent.
ITALY
Italy, which has Europe’s highest death toll, will ease more lockdown restrictions on 4 May after nearly two months of lockdown, meaning parks, construction sites and factories will reopen and people can travel within regions as the nation’s death toll continues to drop. The Italian Prime Minister Giuseppe Conte addressed the nation by television on Sunday to announce lockdown measures enforced on the 9 March will be lifted, with families being able to reunite in small numbers. Covid-19 pandemic has a devastating impact on the Italian economy, as industrial output fell significantly. Italy had a considerable position in the value of industrial production in the EU member states. As Italy’s economic structure is heavily dependent on SMEs, the spread of coronavirus is significantly affecting the economy of Italy. SMEs rely on loans and finances to meet their business requirements. Due to the vulnerabilities facing by the Italian financial sector amid Covid-19, SMEs operations are negatively affected, which in turn, is leading to a significant decline of the Italian economy.
JAPAN
The Japanese government is considering extending the current nationwide state of emergency through 6 May by around one month in a bid to contain the spread of the new coronavirus, government sources said last Thursday. Prime Minister Shinzo Abe first declared a month long state of emergency until 6 May for Tokyo, Osaka and five other prefectures on 7 April amid a sharp rise in infections in such urban areas. He expanded it on 16 April to all 47 prefectures ahead of the Golden Week holidays from late April when many Japanese people usually return to their hometowns or travel for vacations or day trips. Japan has so far confirmed some 14,800 Covid-19 cases, including about 700 from the Diamond Princess Cruise Ship that was quarantined near Tokyo in February, with the death toll standing at around 450.
NORTH AMERICA
Specific to the top northern part of Africa, the month of April and parts of May will see a continuation of the lockdowns in all countries. For Algeria, the authorities extended the lockdown until 29 April. For those wanting to travel there, all international flights and ferries are suspended, and land borders are closed. In Tunisia too, there is a general lockdown in place until 4 May. The current curfew is between 8pm and 6am. Likewise, all flights to Tunisia are suspended, except in cases of emergency and other similar cases. And in Morocco, the lockdown has been extended until 20 May. Flights to and from Morocco have been suspended, with some exceptions.
In Egypt, authorities extended on Thursday 23 April, a night-time curfew through the month of Ramadan, while announcing the gradual easing of other measures.The partial curfew will remain in place from 9pm to 6am and will run until the end of Ramadan. Because of these tough lockdown rules, countries are struggling to put forward containment policies that are glitch-free and so now they are looking to reverse some of these rules, despite the virus continuing to spread.
RUSSIA
On Monday 30 March, retailers and business in general were hit with a real blow when a Presidential decree came into force making it compulsory for everyone to stay-at- home for ‘paid non-working’. People in Russia adjusted as best they could to the “non-working” month of April, as declared by the President, when all public venues and non-essential retail stores are closed. All working stores provide decent protection for customers and staff, while still suffering from a sharp drop in consumer confidence. It is forecast that the Russian retail market will take a -20 per cent LFL plunge in the second quarter and -8 per cent for the total of 2020. The first half of April was a stress—test for the retail industry, not just in Russia but around the world as people relied more heavily than ever on digital.
SAUDI ARABIA
Having been among the first countries to take strict control measures to stop the spread of Covid-19 after the first reported case, Saudi Arabia has been actively escalating actions by closing down mosques, malls, cinemas and schools, as well as the stopping of Umrah activities. People’s movement between cities has been banned aside from commercial vehicles hauling food supplies. The number of cases so far is just over 5,800 cases, with recoveries of more than 930 and deaths just below 80.This is a very good ratio in a population of more than 34 million people. Even though most non-food retail has been on complete lockdown, food retail has been operating normally.All grocery formats are operating within the allowed working hours. Given the conservative approach to manage the spread of the virus in Saudi, retail pick-up is going to be dependent on the number of Covid-19 cases being reported going down.
SINGAPORE
The push for digital payments and the fear of coronavirus (Covid-19) spread through the handling of cash are driving the adoption of electronic payments in Singapore, says GlobalData, a leading data and analytics company. Supported by various government measures to promote electronic payments and robust payments infrastructure, the country will continue to make steady progress in reducing cash usage, with the share of cash in total payments volume expected to decline from 48.3 per cent in 2019 to 39 per cent by 2023.The Singapore retail real estate market has weakened amidst the coronavirus pandemic as transactions fell across all real estate sectors despite significant support measures passed by the government under its Unity Budget, Resilience and Solidarity packages.
SOUTH AFRICA
The country is facing enormous challenges as a result of this coronavirus pandemic. Unlike wealthier western countries, South Africa is still an emerging market with some unique and deep-seated problems. Just a month before the country went into lockdown, Moody’s downgraded South Africa’s credit rating to junk status. Unemployment at 35-40 per cent and represents the highest number in the world. With every week of the lockdown tens of thousands of jobs are being lost. All retail except food and pharmacy is shut.
Under South African law, businesses don’t have to pay rent to landlords in these circumstances. Banks have been given extra liquidity to provide support to businesses. Cash is critical for retailers and their two biggest outlays are on rent and staff. Whilst retailers have saved on rent payments, there is no relief on staff costs.
SPAIN
One of the harder hit countries is Spain, and good news is at a premium at the moment as the country has been in lockdown for nearly two months, with the latest forecasts showing a reduction in GDP of between 6 and 13 per cent and unemployment rising to 21 per cent. The best news is that they are seeing the number of deaths declining.The retail sector will experience a strong fall in consumer confidence, together with a sharp increase in unemployment. Austerity and a culture of saving will take over, but also sustainability and a back to basics approach. It will be a real challenge, but brands will have more opportunities the more they demonstrate their relevance to customers.There is talk of the lockdown being eased with some sections of the economy being allowed to start up again such as construction.
UAE
Covid-19 is an insidious virus that has shifted the world’s consciousness, but the UAE continues to show care, compassion and strength of community during the outbreak. The UAE’s economy like all other global economies will be impacted by the Covid-19 outbreak and the recovery rate of growth will depend on preserving demand and jobs. The UAE authorities have taken several measures including allowing employer’s greater flexibility in amending contractual terms, in a bid to prevent outright job losses by under-pressure businesses. However, in recent days, malls are tentatively re-opening their doors as the country looks to begin making inroads to a new normal in a world in transition. Unfortunately for the UAE, despite measures in place to protect the public from the spread of Covid-19, few visited the shopping centres that have become a major part of UAE living.
UK
Another country that has been hit hard by coronavirus, the UK’s supermarket chains that gone from the heroes of the Covid-19 crisis to near-zeroes in the space of just a fortnight. Flavour of the month for its efforts in feeding the nation during March and early April, Tesco left a sour taste with its decision to pay its shareholders final dividends worth a total of £635M. E-commerce has become one of the major talking points of this pandemic in Britain.There is a sense that the grocers have missed their big opportunity, with demand vastly outstripping capacity. In the past two weeks, fashion giant Next, footwear specialist Schuh and department store chain Fenwick have all reopened their transactional websites following periods of closure.
We have already seen the impact coronavirus can have on struggling retailers who are failing to trade through this pandemic. Department store chain Debenhams and rent-to- own operator Brighthouse have also collapsed since the end of March. Unfortunately, more non-food retailers are likely to join them in falling by the wayside – this pandemic is already proving to be a case of survival of the fittest.
US
In the US, Covid-19 continues to exact a heavy toll on human health and the economy across all industries, with retail at the top of the list. However there are slight signs emerging that show social distancing efforts to “flatten the curve” are beginning to have an impact. While focused on the health and safety of the American public, conversations in Washington, D.C., and state houses across the country are beginning to include the criteria needed to reopen parts of the economy. The severity of the economic impact is becoming clear.
Data for March showed that overall retail sales declined 8.7 per cent, the worst monthly decline on record. Though core retail sales were up slightly, the variability from sector to sector was historic as well. Over 20 million Americans have filed for unemployment, and GDP for Q3 is forecast to drop over 20 per cent. Most retailers have no revenue coming in to cover working capital expenditures like payroll, rent and vendor costs. Only government support can help retailers of all sizes emerge intact when the health crisis abates and Americans can return to work.
Sections of this article were sourced from ‘The Retail World 2020: Retailing in a Time of Crisis, Issue 02’, a World Retail Congress Publication and the contributors of this publication, Deloitte’s ‘Covid-19:Voice of Canadians and Impact to Retailers’.
