Surge capacity

Now that all shops can open on June 15 if they meet Covid-19 guidelines, what might be the first things people want to buy?

We see three retail sectors that will benefit the most, in the short-term:

DIY stores and Garden centres
Whilst DIY retailers were classified as essential retailers during lockdown, garden centres were only allowed to open on 13th May. The large-scale nature of DIY and garden centres, with wide aisles and open spaces provide re-assurance for shoppers, especially as many operate in retail parks or on their own sites where social distancing measures can be more easily implemented.

These factors, combined with warm spring weather and increasing DIY and gardening activity during lockdown, has meant customers have quickly returned, and we have already seen long queues forming outside prominent stores. Local smaller DIY stores have also been in demand in neighbourhood locations. These stores can expect a busy summer.

Beauty
Not being able to visit a hairdresser has meant hair trimmer sales have boomed, with John Lewis reporting an increase of 200% in men's shaving and grooming products, driven largely by clippers back in April. However, what most people want, is for someone to do it properly. 

The nature of hair and beauty salons makes adhering to social distancing guidelines impossible, hence these retailers are among the last to be able to reopen and only 40% of UK respondents in a recent survey stated they would be comfortable going to the hairdressers if lockdown measures were ended in the next month. Despite this, when the time comes, will we behave more like the Italians, where hairdressers were fully booked for three weeks just days after their two-month lockdown was lifted, or New Zealand where Cathedral Junction Barbers in Christchurch received over 50 enquires for midnight appointments on the day that restrictions were eased?

Initially at least, more visual measures, such as full-face visors and limiting the number of customers will likely be required with pre-booking a complete necessity. Hairdressers and beauty salons will be booming for a while.

F&B
While nightclubs and bars may be a fair way off opening in the UK, restaurants and pubs may be able to open on the 4th July, however, the challenge will be to provide that experience and social interaction that is craved, whilst abiding by government guidelines. The effect on atmosphere, and reduced covers means that many restaurants fear their businesses will not be viable. The same fears led to 75,000 establishments across Italy handing their keys to the local mayors in protest.

However, demand for restaurant food delivered through takeaway and home delivery remains high, as witnessed by mile long queues outside McDonald's drive-thrus last week, and we will see more and more restaurants like Pizza Express adapt their sites and menus for pick up and delivery. How pubs adapt will be interesting but those with large gardens are likely to be in high demand during the summer, and expect more queues outside those premises, especially from younger people. Wetherspoon will be encouraging customers to use the firm's app to order and pay and seating areas will be separated by Perspex screens.

While some sectors like fashion and grocery have continued to operate online during lockdown, these three sectors depend on a physical experience.

How long will this high demand last? Expect it continue through the summer but after that the factors that drive demand in recessions will come into play, which we will deal with in a future article.

Ed Newton