How has COVID-19 affected consumer and business behaviour?
Coronavirus has dictated headlines across the world for many months now, and the effect it is having on businesses in a range of industries are catastrophic. The Gift Card and Voucher Association’s recent report has captured some of these impacts. We can see that most businesses have been hit hard, but there is a light at the end of the tunnel. That light is in the form of gift cards and vouchers.
By surveying a sample of 2,000 shoppers, the report allows us to see an overview of effects of COVID-19. Here is a summary of its main findings:
“GlobalData forecasts that Coronavirus will take £15.9bn out of UK retail spend in 2020”
GlobalData’s September analysis predicts that the total UK retail market will be worth £330.4bn, compared with the GCVA’s original (pre-COVID-19) forecast of £346.3bn. This is a 2.7% decrease in expenditure, representing the first nominal fall in decades – even worse than the financial crisis of 2008. Clothing and footwear seem to have taken the hardest hit, whilst food and grocery remains strong.
“While many stores have now reopened, a number of retailers have been slow to do so, deciding that opening stores will not yet be profitable enough, or that they cannot make the safety standards required.”
Thus far we can acknowledge that retail’s return has been welcomed but limited. Shoppers are visiting shops with intention – not only are they making fewer trips, they are shopping at fewer stores each trip. However, encouragingly, most visitors are buying something when they enter the stores, and basket sizes have increased.
“Physical gift cards continue their recovery”
Over half of total gift card purchases were bought in physical form from a retailer instore in September. This represents an increase from August (38.6%). Whilst greater social restrictions are likely to dominate the following months, it is positive to see that physical gift cards are being bought by customers, in their gradual attempt to return to normality.
“The role of gift cards in boosting local businesses has become more prominent throughout the year”
“The use of gift cards as a device to support local businesses has gradually increased since the lockdown.” Says GCVA. 27.2% of those purchasing gift cards for someone else said they did so to “support businesses that I like during the current crisis” over September.
“Further lockdowns in the run-up to Christmas are likely to boost demand for gift cards.”
Almost half of the sample questioned agreed that, in times of tighter lockdowns, they would be more encouraged to purchase gift cards as Christmas presents. This suggests a boost in demand for gift cards on the run up to Christmas.
From this October report, we can conclude that gift cards will be a strong supporter of sales for many businesses this winter. Whilst COVID-19 has damaged the high-street irreversibly, retailers are having to think on their feet at more creative ways to bring in that extra revenue. Sarah Johnson, co-founder of The Akin states in Business Leader “Going back to how things were pre-Covid-19 is not an option. We are entering a new world and retailers should look at it with positivity and see the opportunities it brings. It will allow them to do a hard reboot, rather than a soft restart.”