In this section, we explore the performance of different categories of retail during the pandemic. Global eCommerce sales jumped to US$26.7 trillion by May 2021, an enormous boost that reflected growing consumer demand for online shopping experiences.
Pharmacies were among the few retailers who were able to continue operating through lockdowns for the entirety of the pandemic. With high demand for personal protective equipment (PPE), rapid antigen tests (RAT) and over-the-counter (OTC) medications, as well as periods of panic-buying, retail pharmacies saw massive sales boosts on certain products. However, a reduced number of walk-in shopper traffic also resulted in revenue shrinkage for some pharmacies, and due to market conditions independent pharmacies found it harder to compete with larger ‘banner brands’.
According to analysis from Deloitte, the key challenges pharmaceutical organizations and retail pharmacies faced during the pandemic were gaps in the global supply chain, which significantly impacted the sourcing, acquisition, and distribution of pharmaceutical products, medical supplies, and equipment. The rise of tele-communication and tele-medicine helped address issues around distributing products and redistributing inventory in response to deficits or surpluses, and the implementation of services such as at home delivery and click and collect represented a necessary shift to digital.
Fast Moving Consumer Goods (FMCG)
In what was dubbed the ‘homebody economy’, the pandemic saw consumers increase spending on grocery, household, home cleaning, hygiene and fresh produce products. Supermarkets and grocery stores remained open throughout lockdowns, however with consumers reducing their number of weekly shopping trips and spending more time indoors, online shopping and shopping delivery services surged in popularity. For this reason, retailers with strong digital capabilities experienced growth (often having delivery slots booked for months in advance), while the retailers with weaker eCommerce offerings lost out on consumer interest. Panic buying and hoarding saw demand for FMCG, especially longlife or storable food goods and home luxury goods surge at different points in the pandemic, and this along with disruptions to the supply chain resulted in intermediate shortages of certain products.
Overall, the FMCG Industry is one of the key industries that significantly grew during the COVID-19 crisis. Compared to March 2019, in March 2020 USA interest in these goods increased by 53%. Retailers in France, Germany and the UK also saw record sales of basic products like pasta and soap, in countries such as Australia, shifts in spending habits saw customers buying more locally produced goods than they did pre-pandemic.
With closures and restrictions of hospitality venues and events, increased purchases of alcohol for use at home surged in North America, Europe and countries such as Australia, most notably in the first three-quarters of 2020 with the first wave of COVID-19. As was true of pharmaceutical goods and other FMCGs, retailers who were able to improve their eCommerce capabilities saw significant growth in sales.
Liquor store sales in The United States, from March to September 2020, were US$41.9 billion, representing an increase of 20% and 18% compared to the same period in 2019 and the previous seven-month period respectively. In Australia, between January 2019 to the end of 2021, alcohol sales online and in bottle shops jumped by 29%, which equates to a AUD$3.6 billion increase.
High alcohol retail turnover can likely be attributed to the stressful experience of pandemic conditions, as well as the spending of disposable income that might otherwise have been used on nights out or dining out by consumers.
The publishing industry has dealt with many ‘existential’ threats in the past 20 years, mostly related to the rise of ‘digital disrupters’ and technology such as social media that competes for the attention of readers. Retailers certainly experienced anxiety around the closure of physical stores in periods of lockdown, nevertheless, book sales during the pandemic fared extremely well, with the popularity of ebooks, e-reader technology and the ability to buy books online further strengthening sales.
Over 200 million print books were sold in the UK during 2020,the highest number since 2012. The overall value of UK publisher sales in 2020 was £6.4 billion, 2% higher than 2019 figures.
It’s also important to note that research from the USA Bureau of Labor shows that book purchasing and book reading skewed heavily toward higher income consumers. The top 10% of earners spent nearly 8.5x more on reading than the bottom 10%, meaning that the financial impact of COVID-19 on lower income earners did not affect the bottom line for publishing and book retailing’s bottom line.
In the first three quarters of 2020, the COVID-19 pandemic caused a 30% drop in electronic and electrical equipment sales in low and middle income countries, but only a 5% decline in high-income countries. Overall, sales of telecommunications equipment only decreased globally by 1.4%, with demand for laptops, cell phones, and gaming equipment rising in high income countries but falling in low and middle income countries.
Electronics retailing was affected by supply chain disruptions, with many factories either closed completely or operated with reduced capacities during the pandemic. As a result, there were delays in the production and distribution of products such as the Nintendo Switch (although there was high consumer demand for this product, Nintendo experienced challenges in bringing it to market due to supply chain complications).
Worldwide, sales of heavy electric appliances like refrigerators, washing machines, and ovens dramatically fell by 6–8 % the first few months of 2020. Demand then fluctuated throughout the pandemic for different kinds of goods, with kitchen appliances and home improvement products such as air purifiers experiencing the biggest surge in sales. However, big ticket items such as fridges and washing machines which are expensive and need installation (something that was not possible under strict lockdown regulations) saw a contraction in sales during periods of lockdown. These products were also affected by supply chain shocks as the halt on production of electronic parts took effect, however by 2021, ecommerce platforms such as Amazon and Flipcart were beginning to see a significant uptick in sales on larger white goods once again.
The automotive industry was severely impacted by COVID-19. During 2020, car sales plunged in China, and by April 2020 the same was true of the United States and Europe. Supply chain disruptions in China were a major problem for production, and this combined with large scale manufacturing shutdowns in Europe and closure of assembly plants in America contributed to a massive global downturn in distribution and sales. The effect of various lockdowns and the movement to working from home likely contributed to a downturn in consumer demand for cars during the pandemic.
The one notable exception to this trend was in luxury cars. Rolls-Royce CEO Torsten Müller-Otvös some what infamously credited COVID-19 for the sales boost during an interview with The Financial Times, claiming that the pandemic had made people realize that “life can be short, and you’d better live now than postpone it to a later date…That has helped Roll-Royce.”
In a similar vein, despite supply chain challenges, luxury goods were increasingly in demand over the course of the pandemic. Jeweler Cartier reported a 30% increase in sales during the last three months of 2021 compared to the last quarter of 2020, while Italian fashion house Prada earned 8% more in 2021 than pre-pandemic sales in 2019. Louis Vuitton, Dior, and BMW all reported mid-January 2022 numbers showing that sales have exceeded those in 2020, and actually outpaced pre-pandemic sales.
In the early months of 2020, most fashion retailers experienced short-term impacts of simultaneous ‘demand and supply shocks’ brought about by government lockdowns and limited or completely decimated foot traffic to bricks and mortar stores, with many physical stores shutting shop.
That didn’t stop people discovering fashion online, and sales have in aggregate continued to grow.
The so-called ‘lipstick index’ - a term coined by the former Estée Lauder chairman Leonard Lauder in the early 2000s, describes usual resiliency of cosmetics in economic times of hardship. However, COVID-19 brought with it a new set of challenges for the cosmetics industry, chief among these being face covering required by law. In light of lockdowns and social distancing, many consumers were wearing (and therefore buying) less makeup.
The partial or complete closure of bricks and mortar department and high street stores saw the sale of make-up plummet 40% in 2020 in the UK (which represented approximately £500m, according to the market researcher NPD). In comparison, sales of skincare, body and hair products increased by 234% in the UK in 2020 alone, and this reflected a change in spending priorities for consumers.
Finally, as with many other verticals, COVID-19 majorly accelerated digital transformation in beauty retail, with companies such as L’Oréal reporting that eCommerce now represents close to 20% of sales.