Brexit and COVID-19 legacy: challenges and opportunities for the British retail sector

Brexit and COVID-19 brought a lot of challenges for the British retail sector. How can UK retailers survive this crisis?

For retailers who trade internationally, Brexit has brought its share of additional challenges, related to new regulations, customs rules, taxes, and an overall shortage of human resources in the supply chain.

COVID-19 legacy

Things got, even more, confusing with COVID-19 when established shopping patterns, such as in-store purchasing, collapsed. Instead, online orders increased significantly in 2020-2021, reaching their highest peak in November 2020 and January 2021 – 37% of total sales, compared to an average of 17% for 2018-2019.

But this increase didn’t cover for the losses experienced by the sector. Overall, lower purchases have led to more than 182,000 jobs being lost in 2020 – a 22% increase compared to 2019. 

2021 brings new challenges

After 2020 had proved to be a successful year for online shopping, many asked themselves if this trend would shift the consumers’ shopping behaviours in the future or if it would be a temporary phenomenon, caused by the extraordinary circumstances that the entire world was facing.   

Data shows that since February 2021, the number of online orders has slightly decreased. In August 2021, 1 in 4 orders was happening online (25.5% of the total sales). The volume is still high – compared to 2018-2019 years. 

These numbers may still increase, considering:

(a) the number of COVID-19 infections is increasing. This may result in a part of the population shifting to online shopping again. 

(b) the winter holidays are approaching and

(c) the recent supply shortages experienced in several countries in Europe not only in the oil & gas sector but also in retail. Several articles are already pointing at an aggravating global shortage of semiconductor chips, plastics, and gas and oil, that will affect the available stocks, advising consumers to plan their shopping for holidays.

All this data points towards the fact that it is too early to estimate future trends based only on these circumstances.

So how do retailers make sure that they will survive over the next years?  

Retail post-2021

There is no bullet-proof solution that would make a retail company thrive under a crisis of such proportions. However, these are some of the essential questions that could be considered relevant for British retailers to help them to survive this crisis:

  • Can you lower your fixed and variable costs without affecting quality? Is there a mechanism that would help to do this on an ongoing basis?

With expensive rents, business rates, and higher labour costs, many retailers didn’t have any choice but to close their shops or operate on minimum resources. When costs are high, the recovery is slow, requiring months or even years for companies to get back on track.

  • Can your business be moved to online? What does it take to move the business online?

Having both a physical and online store may be a good strategy to help diversify the revenue stream and increase sales, but this needs to be a very well-thought-out business decision.

  • If you already own an online store, what are the strategies you still need to implement to stay ahead of your competition and increase sales?

With a lot of retailers focusing more on the online sector, the competition has become stronger over these last two years. Additional strategies that would make your online store more visible, your shipping process faster, and your customer service better could have a positive impact on your sales growth. 

  • Can you better prepare for crisis times in future? Are there certain measures you could have taken to make this situation less damaging to your business? Are there measures you applied during COVID-19 that will help you in a future crisis?

The truth is, no one was prepared for or even anticipated the impact that this pandemic will have on our lives. But each business has its “lessons-learned” that need to be further considered and analysed for future planning. Also, preparing thorough contingency plans may temper the negative impact of an unprecedented situation. Another key aspect is to always be prepared to adapt to the consumers’ needs and market conditions. The quicker the adaptation, the faster the recovery. Knowing the shopping behaviours of your consumers is essential to ensure that you can provide a great experience from beginning to the end.

XTENSOS solutions for British retailers

At XTENSOS, we help retailers to access and manage cost-effective customer service teams. In this way, some fixed-costs can be turned into variable costs, without making any compromises on quality or service. Our cost-effective services-centre is in Cluj-Napoca, Romania. This city is known for having a huge pool of multilingual talent available. The number of advanced English speakers is impressive by international standards, and you can access a variety of advanced European language speakers (French, Italian, German, Spanish, Nordic, and Slavic languages).  The city is also very western service-oriented, sharing the same business values as most Western countries such as the UK, Ireland, and the USA.  

We believe that companies can, in this way, focus their actions and budget on other activities that will help increase sales and customer retention. Through our customer service teams, we also bring our experience in terms of customer engagement as we have more than 30 years of experience in building global service companies with a particularly strong background in Quality and Human Resources Management.

There are other supporting services we can offer for retail companies that want to review their growth strategy and establish a future direction. Our Business Consulting Services help companies improve their short and long-term performance and we also have a customer service training programme focused on improving the interaction between your staff your customers.

If you would like to share your recent retail challenges, then get in touch with us and we will be happy to help.

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