Impact of COVID-19 on UK Consumer Retail Spending Patterns

This report examines the unique changes in consumer retail spending within the UK economy during the COVID-19 pandemic. It analyzes shifts in consumer behavior, including increased demand for essential goods like groceries and a rise in online shopping, while non-essential spending decreased. The report details factors influencing these shifts, such as regional lockdowns, demographic changes, and employment impacts. It also explores the UK government's responses, including poverty programs and economic policies aimed at recovery, such as small business grants and government transfers to aid economic recovery. The report highlights the impact on various sectors, including retail clothing, and the adaptation of businesses and consumers to the changing economic landscape.

Unique changes in consumer
retail spending that the UK
economy has experienced

EXECUTIVE SUMMARY
In the present report discussion related to various unique changes seen in UK retail sector
during the time of corona virus has been discussed. It has been analysed that the demand for non
essential goods like travel luggage, home appliances is lowered down. On the other hand demand
for essential items like grocery has been increased. Consumers are more engaged in buying these
products online. Online shoppers are also involved in targeting tech professionals and young
people who have no time in going in-store and are more interested in purchasing. These
consumers are also engaged in checking and pre-researching about the quality and brand of
grocery food items. It has also been analysed that during this pandemic situation millions of
people jobs are at risk. There is a negative shift in employment which is seen in United
Kingdom. Retail clothing brand has also seen a lower down in the second wave of corona as
local lockdowns are implemented. So many of brands have also gone bankrupt.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
Main factors in determining the positive and negative shifts......................................................2
TASK 2............................................................................................................................................8
Main UK governmental and economic policies to aid economic recovery.................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
1

INTRODUCTION
Supply and demand in economics can be defined as relationship between quantity of goods
which manufacturers need to sell and quantity of products that consumers wish to buy. During
the time of Corona-virus pandemic has impacted consumer retail spending in unique ways,
increasing some types of retail spending while reducing others. This has led to various changes
in United Kingdom’s economy. Present report will lay emphasis on the unique changes in
consumer retail spending that the UK economy has experienced from in 2020. It will also discuss
about adaptations by the UK government in response to the change in UK consumer retail
spending habits in 2020
TASK 1
Main factors in determining the positive and negative shifts
Figure 1 Limits in purchase
(Source: Limits in purchase, 2020)
There are various factors which are linked to positive and negative shifts in demand and
supply curve. During the time of pandemic the consumers spending has been changed, some of
the retail spending has increased while reducing down others. Factors which are linked to this
include the following:
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UK regional or local demand factors: Government across whole world are involved in
saving lives by taking various dramatic measures. They have imposed lockdowns; this had
drastic impact on UK retail industry. According to office of national statistics 23% of businesses
have stopped their trading and other 60% who are trading are in loss. The GDP of United
Kingdom is expected to lower down by 9%. Because of the novel corona-virus pandemic supply
and demand of related to operations in retail industry has been lowered down. It has been
analysed that during time of pandemic there is an increase of need for essential goods like food
and groceries while demand for luxurious goods has been decreased. Demand for luggage, travel
accessories, home appliances is decreased in regional and local level in United Kingdom. Non-
essential retail activities have been shut down and the essential retail business are operating in
severe difficult conditions with a shortage of labour supply. It has been analysed that in UK
clothing retailers have been dropped out by about 83.9% in April 2020. Most of the popular
business has been declared bankrupt. National statistics have also declared the proportion of
income spent online in retail industry in UK have been increased from 19.1% in April 2019 to
30.7% in April 2020. It has been analysed that grocery shopping has been done from 30% in
quarter 1 to 34% in quarter. The regional has only shown growth of 1%. There has been a
positive shift in sub-urban areas for online grocery shopping. . Consumers are also involved in
purchasing less because of pandemic situation income has been lowered down and jobs are also
being lost.
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Figure 2 Shopping growth
(Source: Covid-19 and the retail sector, 2020)
UK population and demographics: Consumers shopping trends and patterns have been
changed during corona virus pandemic in United Kingdom. There has been 3.5% fall down in
shopping centres in October 2020 as local lockdowns are being implemented. There has been a
second wave of corona virus during winter times and because of this reason pubs and restaurants
have been closed again. Shopping centres are worst hit during this period has local and regional
consumers are not visiting these places. There has been 29% increase in online shopping and
mostly people between 18-35 are being involved in doing this in order to maintain their status
quo. There has been 24 and 16% decline in purchase on non essential commodities. Local parks
have also been closed down and no people are going over there. Here the decline of 2.3% is
being seen over there. Entire nation has been put on lockdown again and there can be seen 20%
downfall in retail sales. The sale of non essential goods can be lower down by 29% (Lea, 2020).
It has also been analysed that 71% of British people are no ready to buy in retail store during this
Christmas time. On the other hand 56% of them have said that they will prefer to shop online as
they feel that it is safer. 36% of people have also said that they need to cut down their spending
on retail non essential items during this festive time.
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Figure 3 Change in shopping patterns
(Source: Change in shopping patterns, 2020)
Whole world economy has suffered because of corona virus pandemic and it will continue if
the vaccine does not come on time. Online shoppers are shifting their preferences over brand but
still 80% of retail brands are not implementing loyalty program in their marketing strategy. The
demand for essential goods between high number of population is increased where the demand
for non essential goods items are being decreased. Food sales has seen a high rise by 9.2% in
around 26 weeks, also Tesco pre-tax profits has been surged 28.7% year on year. Clothing line
and F&F has fallen down by 17%. 45% of online shoppers, this year do not care about black
Friday and no purchase will be made in store (Banks, Karjalainen and Propper, 2020). Online
grocery shops are also targeting young people who have no time to visit the shops. 63% of the
consumers have said that they do research quality and brand of food items before purchasing
them online. 52% of them also said that consumers took their time so that they can have best of
products. UK has experienced a drastic change in online grocery shopping criteria and now about
3 in 10 consumers in regional areas have shopped their grocery by making use of internet
services. The retailers have also made sure that everyone gets what they need and no extra items
are provided to any consumers.
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Figure 4 Employment conditions
(Source: Stats roundup: corona virus impact on marketing, ecommerce & advertising, 2020)
The income effect and shifts in employment: During the time of novel corona-virus
pandemic so many people have lost their jobs and also their loved ones. It is a really tough time
for everyone around the world. It has been analysed that around 7.6 Billion jobs which means
24% of the UK workforce are at risk of losing jobs (Tabner, 2020). People and places with the
lowest income are most vulnerable because of lockdown situation amid corona virus pandemic.
So many people in United Kingdom’s clothing sector has lost their job or shift their employment
so that they can serve even basic living to their families. Many of the companies who are seeing
the situation of high demand and letting people shift the employment include door to door
delivery and hygiene products. There is a big shift in job opportunities, post financial crisis. Type
of employment opportunities are also being changed during the time of novel corona virus crisis.
In this tough situation Amazon has provided 15 thousand job opportunities for part time
positions in delivery driver opportunities (Lea, 2020). It has also been analysed that job positing
for heavy good vehicles has also been raised up in United Kingdom. Hermes is also offering job
opportunities for shift to home shopping. Hospitality sector are not recruiting and people who
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were working in these sectors has lost their jobs and now they are trying to shift their jobs. They
are been applying in grocery stores. Also some people are starting their online business too.
Consumers are also involved in purchasing less because of pandemic situation income has been
lowered down and jobs are also being lost. Super-market chains are hiring like for example Aldi
has also provided 1200 jobs for door store delivery. Morison has also hired 20,000 staff so that
they can manage online shopping which is now in trend (Kinross And et.al., 2020). It has also
been analysed that so many people have left job and they are being involved in trying to launch
something online. Government of UK is also being involved in supporting small business and
self employed. These are the changes which can be seen during the time of pandemic.
Purchasing limits subsidises, or other government intervention: During the time of
novel corona virus pandemic situation, consumers are not buying much because of low income.
Tesco has limit down sell of their essential goods in order to reduce down panic buying during
pandemic situation. Super market chain has limit down purchasing of flour, pasts, baby wipes
and many essential items to 3 per consumers. This is basically being done so that no panic is
being created by consumers. The retailers have also made sure that everyone gets what they need
and no extra items are provided to any consumers. Government has also restricted more than 5
people buying together in stores, so better social distancing measures are need to be taken by
super market chain. Medex scientific has also created job so that they can satisfy growing
demands for mask and even for PPE kit. Before pandemic hardly these products were used, but
now this has become an essential in day to day life.
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Figure 5 Jobs at risk
(Source: Lockdown lost in job, 2020)
TASK 2
Main UK governmental and economic policies to aid economic recovery
There are various policies that have been implemented by United Kingdom’s government in
order to overcome from the loss which they have faced because of novel corona virus pandemic.
UK governmental and economic policies to aid economic recovery from loss of consumer retail
spending. The policies include the following:
Poverty programmes: There has been 61% rise in poverty worldwide because of corona
virus pandemic. In order to overcome this problem UK government has implemented various
programmes. Living standards have been sludge and they are financially even worse according to
save the children foundation. Response of UK government has been substantial and they have
been involved in developing various funding investments. They have developed small business
granting fund in order to support local. Government is also motivating consumers to go vocal for
local. One-off grant of GBP 10,000 to small business will be available (Leiva‐Leon, Pérez-
Quirós and Rots, 2020). The eligibility criterion for this is that these funds will be available to
business operating in England. It is being developed in order to reduce down poverty. Also the
government has taken initiative to supply free food for those whose jobs are lost and are poor
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who cannot afford to buy food. In this scheme mostly they have covered labours who cannot
afford to have meal even one time. These initiatives are being taken to remove poverty during
these tough times.
Government transfers: The United Kingdom Government has transferred 36 Billion in
bank accounts of many beneficiaries during the time of corona virus pandemic. Various fiscal
measures are being announced and taken by all over European Union. Central bank has
developed strong monetary policy during the time of financial crisis situation. The European
state aid and fiscal rules have been suspended by government. Fiscal measures have been taken
so that economic fallout can be controlled and maintained. There were lots of immediate fiscal
measures taken like €1.5 billion for workers who need to shut down their business because of
pandemic and they have no other source of earning. 1291,69 Euros are allowed to them, they can
mandate this money from government (Nicola And et.al., 2020). €100 Billion were being given
for the credit guarantee programme for companies and this was even being done for self
employed. All these measures were being taken for those who were in huge need during the time
of pandemic situation. €10 has also been increased in net borrowings so that they can enhance
credit lines. Necessary measures related to government transfers are being taken during the time
of pandemic situation (Lea, 2020). €200 million increase in pre covid ICO financing facilities.
400 million were also being developed additionally to support self employed. These measures
were taken to reduce down the negative impact of corona virus on financial capabilities of
people.
Retail subsidies: It has been analysed that amidst pandemic situation UK shopper’s
numbers have been raised after government has launched state funded dining scheme. Retail and
hospitality sector are being struggling because of heavy rent and tax. In this the government has
provided benefits to retail owners and even self employed as people can take loan from
government in order to run their business and have a basic living during this difficult time. This
scheme launch has been relief for people who has suffered because of pandemic.
Stimulus packages: Post COVID there are various stimulus packages which are being
launched by United Kingdom government. New job supports scheme has been launched by UK
government in order to support so many parents and their children who are jobless. This is being
given to children who are falling below the poverty line. In this child benefit will be given to so
many children by putting money into their family’s pocket. This scheme is also been
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implemented in order to lower down the poverty and also to support families who are in
vulnerable situation. It is being done to help poor.
CONCLUSION
From the above study it has been summarised that retail sectors in United Kingdom has
suffered huge loss during the time of novel corona virus pandemic. So many people have lost
their jobs amidst pandemic. It has also been analysed that online grocery shopping in retails
stores have been increased. So many people who have no time to visit stores in personal are
doing online shopping. It has also been analysed that Non-essential retail activities have been
shut down and the essential retail business are operating in severe difficult conditions with a
shortage of labour supply. The demand for luxurious goods have also been lowered down,
consumers are more focused on purchasing essential good items. There is also less demand for
clothing as consumers in UK do not prefer to going out. Economy of UK has been lowered down
because of this pandemic situation. It has also been analysed that UK government has also
implemented poverty program in order to support poor and vulnerable. They have also taken
initiative so that local shops business can also be expanded during the time of pandemic.
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