Coronavirus pandemic ‘worse than financial crisis’ for UK retail sector
The impact of the coronavirus pandemic on the high street has been worse than the aftermath of the financial crisis, experts said as UK retail health plunged to record lows.
The retail health index by KPMG and Ipsos fell three points to 71 in the first quarter of the year – a new record low.
The index was previously expected to hold steady at 74 in the first quarter, with hopes that the certainty provided by the conclusive general election result would benefit the UK retail industry during 2020.
However, UK retail health is now expected to suffer a further sharp decline of nine points in the second quarter.
Experts said the dive is dependent on how long the UK’s lockdown continues and the subsequent enforcement of social distancing measures.
The coronavirus pandemic has “quickly eclipsed even the sector’s previous woes, and with it any hopes of improved health for the foreseeable future”, the study said.
Ipsos Retail Performance director of retail intelligence Tim Denison said: “As was clear through heated debate, the longevity and nature of the current lockdown measures is largely unknown, but there remains little doubt that retail will be severely impacted – at levels eclipsing what had previously been experienced during the 2008/09 financial crisis.
“Unlike previous historic downturns, this is not only about the consumer’s response to what is occurring around them, but rather the mechanics of daily life have fundamentally changed, forcing the consumer’s hand and blocking demand.
“Even when restrictions are lifted – whenever and however that may be – it’s unlikely we’ll see a return to ‘normal’ by any means.”
He added: “The future is rather murky, and consumer confidence is likely to be volatile for the foreseeable future, especially as the longer-term impact of the pandemic becomes clearer.”