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Retail Industry Overview: The Coronavirus Era Outlook

July 2020

The retail industry globally faces significant challenges as a result of the combination of the Coronavirus (COVID-19) pandemic, low oil prices and existing economic problems. This report lays out Euromonitor’s phases of retail evolution due to COVID-19 and offers snapshots of how retail will be affected in each region. It will also consider the major trends emerging from these shifts, including the growth of e-commerce and role of digital intermediaries.

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Key findings

The COVID-19 pandemic will cause retail sales to decline by 3.5% globally in 2020

The COVID-19 pandemic will negatively impact the retail industry globally in 2020 and 2021. The pandemic required the temporary closure of many stores, weakened consumer demand and increased the costs for many retailers.

Oil prices compound economic difficulties in the Middle East, Africa

Beyond the direct effects of the pandemic itself, retailers in many emerging markets are contending with the negative effects of low oil prices on consumer spending. Low oil prices are due to several factors, but travel limitations imposed by governments are one drag on the demand for oil.

E-commerce has evolved, with sales growing strongly

Consumers have increasingly turned to e-commerce during the pandemic, with the greatest gains in e-commerce penetration rates coming from markets that already had relatively high levels of e-commerce sales. South Korea and China in particular will record strong increases. E-commerce intermediaries, including marketplaces, delivery platforms, and social media and messaging services, play a particularly important role in e-commerce’s 2020 growth.

Retail faces a multi-year recovery process

The trajectory of the pandemic will largely determine each market’s retail recovery, with markets with the lowest levels of cases generally showing the most rapid recoveries. Recovery is also likely to be uneven, with certain channels recovering much more rapidly than others. In general, specialist retailers and department stores face the longest recoveries.

Introduction

Scope
About this report
Key findings

Overview of Retail and Covid-19

Retail sales will decline in nearly all regions in 2020
Retailers face several simultaneous challenges in 2020
Temporary store closures stem virus, harm annual sales
The US to post the largest absolute sales decline in 2020
The retail industry faces a multi-year recovery process

Phases of Retail Recovery

Retail’s four phases of COVID-19 evolution
Phase 1: Crisis
Phase 2: Stabilisation
Phase 3: Recovery
Phase 4: Normalisation
Subsequent “waves” of virus will move countries to earlier phases

Regional Snapshots

Australasia: effective public health response mitigates declines
Asia Pacific: COVID-19 case loads shape retail outlook
Middle East: low oil prices compound public health challenges
Africa: pandemic compounds existing economic challenges
Eastern Europe: economic factors to delay Russian recovery
Latin America: overlapping challenges in action
North America: diverging government efforts between US, Canada
Western Europe: low case numbers lead to better retail outcomes

Key Trends in Retail

Grocery sales grow due to stockpiling, closed institutional channels
E-commerce will be transformed by the COVID-19 pandemic
Manufacturers, mono-brand retailers invest in omnichannel
Even essential retailers are seeing costs rise

Looking Ahead

Retail’s performance is tied to the trajectory of the pandemic
High levels of COVID-19 cases severely hinder retailers
Recovery will be a slow process due to overlapping challenges
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