How has Covid-19 Impacted on the Retail Industry?

In the UK, we’ve been discussing the so-called ‘death of the high street’ for more than a decade now, but there’s no doubt that this has been accelerated in the wake of the Covid-19 pandemic.

This trend is also being replicated across the globe, with a number of high-profile retailers having been forced to downscale and in some instances close their doors in the wake of stringent social distancing measures.

Of course, this has been somewhat offset by a noticeable spike in online sales, but this is hardly comforting for brands that operate solely as brick-and-mortar retailers. But are there any areas of retail that have performed better than others, and how has Taiwan set an example for others to follow?

A Map of the Global Retail Sector

Let’s start with the bad news; lockdowns throughout the world have turned high streets into ghost towns while creating increasingly intense levels of competition online.

Of course, some of these retailers were struggling long before the Covid-19 pandemic began, but the relentless spread of coronavirus has definitely accelerated their decline. This is particularly true in the UK, where a study found that while an estimated 15% of non-food retailers had negative cash flow at the beginning of the outbreak, more than half could be wiped out if the pandemic continues.

Debenhams is one of the largest UK retailers to enter administration of late, following hot on the heels of fashion brands Oasis and Warehouse.

Premium denim retailer True Religion has also filed for bankruptcy protection stateside, highlighting the particular challenge facing fashion brands in a strained socio-economic climate.

If we glance online, we say that ecommerce sales in the UK increased by 22% year-on-year during the first week in April, although once again it’s fair to say that some sectors were more prosperous than others.

The beauty sector saw an incredible 140% rise in transactions during the first week in April, for example, with electrical and garden sales increasing by 90% and 70% respectively. However, clothing sales fell by 20% year-on-year, meaning that the global pandemic has been particularly devastating for fashion brands.

How has Taiwan Bucked This Trend?

With the crippled apparel group Esprit also closing all of its Asian stores, it’s fair to say that this region has been similarly affected as a result of Covid-19.

However, regions such as Taiwan have largely been able to buck this trend, with this country having implemented a clear and proactive Covid-19 response that has capped the number of associated fatalities to a little over 400. Many have attributed this response to the country’ experience of dealing with the previous SARS outbreak, which had a similar impact in the Asia-Pacific region.

This has also had a positive knock-on effect for retail and leisure sectors in Taiwan, with companies showcasing sustained growth and share value increases during the last quarter.

To this end, Taiwan’s retail sector grew by approximately 2.6% to $103.2 billion year-on-year, while foreign investment in the hotel and commerce sectors increased markedly during the same period.

While the lesson may have come too late for retail spaces in the world’s developed economies, there’s no doubt that Taiwan should shine like a beacon for others to follow. We should definitely take note of these nation’s relative growth and security, as it has continued to outperform a number of larger and better-resourced countries.