Loss Prevention Research Council Weekly Series - Episode 51 - Store Closures and Europe Grocery Trends
With Dr. Read Hayes, Tony D'Onofrio, Tom Meehan
BDO BI-ANNUAL BANKRUPTCY UPDATE
HTTPS://WWW.BDO.COM/INSIGHTS/INDUSTRIES/RETAIL-CONSUMER-PRODUCTS/BDO-BIANNUAL-BANKRUPTCY-UPDATE
2020 resulted in the largest number of retail bankruptcies filed since the financial crisis in 2009. However, the pace of Chapter 11 filings curbed off at the end of 2020, making the numbers less bleak than originally expected.
There were 15 major filings in the first half of 2020: 14 in the 3rd quarter. However, there was a clear slowdown in retail bankruptcy filings after Labor Day, with only six in the 4th quarter. In addition, there were four bankruptcy filings in January 2021, only two of which were by retailers with more than 25 stores.
Despite overall sales growth last year, the final 2020 retail sales figures will not be known until returns have been processed from the holiday season. Returns account for more than $400 billion in lost sales for U.S. retailers, and online returns more than doubled from 2019.
On average, retailers expect 13.3% of merchandise sold during the 2020 holiday season to be returned, which is expected to cost retailers $101 billion, according to the survey.
The numerous filings and store closings of mall-based retailers also gave rise to mall vacancy rates, which grew to 10.5% by Q4—the highest in twenty years—up from 10.1% in Q3 and 9.7% in 2019.
159 million square feet of retail space was closed in 2020. Vacancy rates across the retail sector overall averaged 20% in the second half of the year. These vacancies leave significant retail space to be repurposed, especially in malls, which have a high concentration of apparel retailers.
In the year ahead, 36% of retailers are eliminating or consolidating floor space as a means of cost optimization and 31% are reducing their mall-based stores.
BDO expects the first half of 2021 will continue to see some retail bankruptcies and store closings, but at a slower rate than in 2020.
Retail Me Not Retail Outlook for 2021
https://www.twice.com/blog/another-view/infographic-retailmenot-2021-retail-outlook
Survey of 5,000 consumers on how their shopping habits have evolved over the last year and what their hopes and plans are in the months to come.
74% say COVID-19 has impacted their shopping journey
42% expect these changes to be permanent
44% find themselves purchasing items in advance more often.
32% more focused on receiving instant savings on items
30% chose to shop with an online retailer for the first time due to COVID-19 restrictions in 2020
70% of Americans say finding a discount or offer is more important today than a year ago.
Top 3 things consumers are looking forward to when the pandemic is over
- Travel to visit family and friends
- Take a vacation
- Dine out at restaurants more often
In the next six months millennials are most likely to spend more on clothing, accessories, and technology for leisure.
High earners $75K or more are 67% more likely to spend more across all categories in 2021.
Disruption & Uncertainty – The State of Europe Grocery Retail 2021 – A new research report from McKinsey
https://www.mckinsey.com/industries/retail/our-insights/the-path-forward-for-european-grocery-retailers?cid=app
Ten key trends that will shape the grocery industry in the coming years
- Restaurant return – 49% of CEOs think that the market situation will worsen in 2021 compared to 2020.
- Online becomes core – 39% growth contribution of online in the UK in 2020 (18% average in Europe).
- Brick-and-mortar supermarkets losing share. 5.9% annual growth 2015-2019 of discount, online, minimarkets, and specialty stores, while supermarkets grew only 1.6% per year.
- Value is King again – 37% of consumers plan to look for ways to save money while grocery shopping.
- Higher quality expectations in entry level price tiers. 26% of consumers want to save more money on food in 2021 and ask for more sustainable and healthy products at the same time.
- Health and organic – 30% of consumers intent to spend more on healthy eating in 2021.
- Sustainability – 19% of consumers intend to spend more on environmentally friendly products in 2021.
- Convenience food – 34% of CEOs name convenience food as top priority
- Technology as a differentiator. 13% annual growth of investments in warehouse automation; speed in IT become a differentiator.
- Advanced analytics and the path toward personalization – 3-6% additional sales through advanced analytics.
For USA grocery trends, check out my latest retail blog called “The disruptive very competitive future of grocery retail”
The sections in the latest article include:
Walmart versus Amazon: The Grocery Wars are Just Getting Started. Hint of what’s in this section– Walmart is currently winning the grocery wars
E-Commerce Will Not Eat All Your Groceries – Hint Physical stores will remain critical to retail’s future success.
Technology Will Continue to Lead Grocery Transformation – Hint expect more curbside, more contactless, and more computer vision with AI.
The Power Brokers of the Retail Channel – Hint retailers are no longer in charge of where the industry goes next
Summarizing this week:
- The retail industry had a tough 2020, but is recovering strongly.
- We are not going back to business-as-usual post pandemic and many of our new habits will stick.
- Grocery is the largest and one of the most important sectors in retail. Through the pandemic they stayed positive because they were deemed essential, but they will continue to have major competitive fights ahead.
- The LPRC is the perfect place to test new ideas of where retail goes next, especially from a loss prevention point of view.
Active Shooters are an active threat and Bankruptcy alerts! In this week’s episode, our co-hosts discuss these topics and more, including Return Costs for Retailers, Consumer Interests in the next Six Months, Fake Vaccine Cards, Fake Negative Tests, End of Qualified Immunity, and LPRC FusionNet is Growing. Listen in to stay updated on hot topics in the industry and more!
