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The Phoenix Awakes: Retail & Leisure Trends In Europe

Yvonne Court • 22/06/2020

While a month ago, we looked to Asia for indications as to what to expect once Europe moved towards a post-covid ‘new normal’ in retail and leisure, there is now an increasing body of experience from across Europe from which to draw, as non-essential stores in UK re-open this week. Shopping and leisure habits and culture are more similar across Europe than arguably they are in Asia, where there remain huge variations between countries. It must be remembered though that the context and outcome still vary by country in Europe, largely dependent on the government’s approach to the dealing with the spread of the virus. Some countries have had very strict quarantines/lockdowns (Italy, Spain, Greece and France) and others have continued to operate pretty much business as usual (notably Sweden).  

The retail and leisure landscape across Europe has however seen much change in a relatively short period of time (see Figure 1). Just one month ago most of Europe’s non-essential retail, leisure and entertainment venues were closed, and had been for some time. Some were closed by decree and others in response to a dramatic decline in footfall, even in those markets which did not enter ‘lockdown’ as shown by the dark dots. 

european retail trends matrix post covid19

Fig 1

In early June the landscape is rather different as indicated by the array of bright blue dots for most countries. With the notable exception of the UK, Ireland and Russia, most countries had lifted many of the earlier restrictions. These have generally been lifted in a phased way. Most countries have seen first the re-opening of specific categories of stores e.g. DIY and garden centres, hair dressing salons, followed by the opening of other retail sectors. Some countries have stipulated size restrictions (e.g. initially in Germany it was only stores of under 800 sq m that could open); and in others it has varied by region of the country. There are only a few countries in Europe now where non-essential shops have not opened again, though the infection situation will be monitored, even where stores have re-opened. Compared to much of the rest of the world (see Figure 2) it could be argued that Europe is ahead in terms of having most of its non-essential retail open.  

european retail opening trends post covid-19

Fig 2

There are many guidelines surrounding how stores are to re-open including social distancing varying between one and two metres; opening hours restrictions, limitations on the number of people allowed in a store at a time, one-way systems in stores, wearing of face masks and increased use of hand sanitisers. There will also be restrictions on the use of changing rooms and handling of products, including quarantined returns. It remains to be seen how this will impact on consumer behaviour, though the visibility of such measures is likely to have a bearing on consumer confidence levels and by extension their willingness to shop. Consumer confidence will be critical to return to ‘normal’ albeit under a different guise to pre-covid. 

In most markets, shopping centres are in the later phases of lifting restrictions. In several countries, shopping centres have now re-opened or are in the process of opening again. Initially in France there were size restrictions, only shopping centres under 40,000 sqm could open, though almost all have now re-opened. 

Many food and beverage outlets/restaurants which are closed to in-house customers have been able to provide takeaway and home delivery services (a trend being observed globally - and one which could be a lifeline for many such operators, though this will not necessarily compensate for the loss of dine-in revenue). Some restaurants with outdoor seating on terraces etc. have been able to re-open subject to the necessary social distancing being applied.  

The impact on the future physical retail and leisure landscape remains to be seen, but it is likely to be very different from that seen before the COVID-19 pandemic. It is still too soon to assess the impact on footfall and sales, and both will take time to get back close to pre-covid levels. Anecdotal feedback is that there are improvements week on week both in terms of footfall and turnover. In most countries, footfall appears to be showing a decrease on the same period last year, though it is slowly improving and largely depends on the type of retail and leisure destination.  

The sectors that appear to be rebounding most quickly are out of town parks and outlets, likely because they are more open to the elements, as shown by preliminary findings of consumer surveys. Major city centres where tourism is a driver of footfall and spending are likely to recover more slowly until national borders are re-opened and travel restrictions are lifted.  

Across the retail and leisure sectors there will also be variations in the speed of recovery, as consumers decide how they spend their money and what has become more important to them. Again, anecdotally the retail categories that have performed well since opening are sports and electronics. The return to pre-covid sales levels among retailers with smaller stores is more of a challenge, because of the necessary social distancing measures, though conversion rates are anecdotally higher.  

Even as restrictions are lifted it could take time for people to go out again and shop in physical stores. Consumer behaviour has changed drastically and although online retail is likely to remain higher than pre-covid levels, the importance of physical retail is evident as countries begin to recover/rebound. It will take some time for consumers to get back to the same mindset that they once had just 3 months ago, but they will. We are facing a new normal, where the whole retail landscape has changed forever – even the definition of retail has evolved and is now less clear.  

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