From panic buying to mass store closures – looking at the winners and losers in retail (by category)

The retail environment is changing on a daily and even hourly basis as a result of COVID-19, with consumer responses to the pandemic being felt across the industry and impacting retailers in very different ways.

The extremes ranging from panic buying in the supermarkets to fundamental changes to business models, through to the mass store closure across national chain retailers, are equally as well publicised.

Helicopter view

While panic buying appears to be moderating across key categories, there remains an element of stockpiling and consumers preparing for extended quarantine restrictions.

Hospitality and service based categories have been directly impacted by social distancing measures which limited or stopped trade. Discretionary categories have also been materially impacted with consumers conserving cash where possible, given the uncertainty around the duration and severity of the situation and predicted increases in unemployment.

Retailers in metro areas and regional shopping centres with large numbers of speciality stores have been more exposed than suburban, supermarket based shopping centres.

Here is a look at winners and losers for weekly sales data to the week ended 29 March 2020.

Winners

• Supermarkets, food and liquor retailers

• Pharmaceutical retailers

• Hardware, building supplies and garden retailers

• Computers and electrical appliances

• Toy and game, sporting goods retailers (over the last week)

Losers

• Discretionary retailers (in particular footwear, clothing and apparel, department stores)

• Cafes, restaurants and takeaway food service

• Personal care and health related service

• Travel related retailers (travel agencies, fuel)

A closer look

Where it gets more interesting is looking at the magnitude of the impacts on sales performance and trends over the past four weeks at a category level and the underlying drivers.

Supermarkets – material increase, moderating
Stockpiling apparent since the beginning of March. While sales remain materially up, they appear to have peaked. Strong demand likely to continue while restrictions and fear of full “lock-down” remain. Key categories includes essentials such as toilet paper, pasta and medical supplies. Permitted trading hours extended to cope with demand (noting some supermarkets are adjusting hours to allow for stockpiling).

Specialised food retailers – material increase, moderating
Stockpiling apparent since the beginning of March. Biggest impact initially seen amongst fruit and vegetables retailers, but more pronounced in meat and seafood retailers over the past week. Appears to have peaked but strong demand likely to continue while restrictions remain in place.

Liquor – increase, accelerating
Stockpiling apparent with material increases in the past two weeks. Likely to be at its peak but strong demand likely to continue while restrictions remain in place (including closure of entertainment venues and places of gathering). Buying limits now imposed in some states.

Pharmaceuticals, cosmetics and toiletries – material increase, moderating
Stockpiling apparent since the beginning of March. Appears to have peaked but strong demand likely to continue while health remain front of mind and restrictions remain in place.

Flowers – decrease, accelerating
Declining since the start of March, accelerated decline in the past two weeks. Seen as a discretionary category, but a significant impact on retailers focused on events and corporate clients. Vulnerable to expanded restrictions.

Hardware, building and garden supplies – increase, accelerating
Modest increase in sales from mid-March, accelerating in past two weeks in anticipation of extended quarantine restrictions and passing the time at home by ticking off those odd jobs on the to do list. Any material increase in demand likely temporary.

Floor coverings – increase, variable
Modest overall increase, with a few strong sales weeks in March. Likely in anticipation of extended quarantine restrictions and making the time at home more comfortable.

Furniture – decrease, variable
After a strong end to February, experienced a decline in recent weeks, but no clear direction. Likely to be impacted by the reduced movement between dwellings during any extended quarantine.

Manchester – decrease, accelerating
Initially variable, accelerating decline in sales apparent over the past two weeks. Discretionary category, vulnerable to extended quarantine restrictions.

Housewares – flat, variable
Housewares experienced an increase over the past week, but no clear direction. Likely to hold up better than other discretionary categories as consumers find ways to make the time at home more comfortable.

Computers supplies – increase, stable
Demand stabilised at a heightened level over the past two weeks as workers continue setting up to work from home. Any increase in demand likely one-off with more modest sales in the future.

Electrical appliances – increase, stable
Sales accelerated over the past three weeks. Any material increase in demand likely temporary as consumers set up their home in anticipation of extended quarantine restrictions.

Fuel – decrease, accelerating
Decreasing as movement decreases in line with increasing quarantine restrictions. Likely to continue while quarantine continues. Vulnerable to extended or further quarantine restrictions.

Motor vehicle retailing – decrease, accelerating
Decreasing as movement decreases and people encouraged to stay at home, with accelerating apparent over the last two weeks. Vulnerable to extended or further quarantine restrictions.

Motorcycle retailing – modest increase, stable
Stronger growth over the last two weeks. Vulnerable to extended or further quarantine restrictions.

Motor vehicle parts and tyre retailing – flat, mixed
Variable results with no clear direction. Vulnerable to extended or further quarantine restrictions.

Sporting and camping gear – flat, recent spike
Initial decline in sales given discretionary nature of categories, but spiked in past week. Any material increase in demand likely temporary as consumers set up their home in anticipation of extended quarantine restrictions.

Toys and games – decrease, recent spike
Initial decline in sales given discretionary nature of categories, but spiked in past week. Any material increase in demand likely temporary as consumers set up their home in anticipation of extended quarantine restrictions.

Newspapers, stationery and books – modest increase, accelerating slightly
Modest increase since the start of March as people spending more time at home.

Clothing, footwear and personal accessories – material decline, accelerating
Dramatic decline in sales since the start of March, accelerating. Many chain retailers closing their entire network given it is not economically viable to keep the doors open. The exceptions are subcategories on basics and comfort wear. Focus on online and many looking to expand channels through online marketplaces. Vulnerable to extended and further quarantine restrictions.

Department stores – material decline, accelerating
Dramatic decline in sales since the start of March, accelerating. Many major department stores heavily exposed to discretionary categories now closed, with discount stores (including online department stores) benefiting from a focus on essentials. Vulnerable to extended quarantine restrictions.

Cafes and restaurants – decline, accelerating  
Material declines in recent weeks as a result in restrictions to takeaway. Many businesses pivoting to provide take away but teething issues when not historically set up to operate in that fashion and with limited visibility online. Vulnerable to further quarantine restrictions.

Catering services – recent decline, accelerating
Initial improvement in sales, but dramatic decline last week given increased competition from venues offering takeaway food and cancellation/deferral of corporate events. Vulnerable to extended quarantine restrictions.

Takeaway food services – decline, accelerating  
Facing increasing competition from cafes and restaurants now offering takeaway. Those in shopping centre food courts amongst the most impacted. Vulnerable to extended quarantine restrictions.

Personal care services (hairdressers, beauty) – decline, accelerating  
Reduction in sales at accelerating pace as restrictions on provision of services introduced. Limitations on ability to trade for many operators. Remaining operators vulnerable to extended quarantine restrictions.

Health services – decline, accelerating Reduction in sales at accelerating pace due to restrictions on movements of people. Vulnerable to extended quarantine restrictions.

Gyms and fitness centres, sporting clubs – material decline, accelerating  
Limited ability to trade given restrictions on public gatherings. Vulnerable to extended quarantine restrictions.

Travel agency and tourism – material decline, accelerating
Material decline in sales which is continuing to accelerate as restrictions on movements of people, travel and uncertainty about when these may be eased. Vulnerable to extended quarantine restrictions.

Final comments

Both retailers and consumers (as well as landlords and financiers) are being forced to respond and react to the situation that will not only have short and medium term impacts, but will permanently change behaviour and the landscape, leaving an indelible mark on the industry.

References: Kepler Retail Index, CBA DailyIQ