Retail and Consumer Briefing - PwC...Golden Quarter Christmas trading grocery growth, 2019 vs 2020 Source: Company trading statements, Kantar January 2021 | 26 Notes: • Aldi, Lidl

Retail and Consumer BriefingJanuary 2021

Today’s speakers

Golden Quarter January 2021 | 2

Head of

Consumer

Markets

Senior Retail

Advisor

Economics

Leader

Head of Real

Estate Advisory

Head of Retail

Strategy

Lisa

Hooker

Kien

Tan

Nick

Forrest

Ainsley

Moore

Jacqueline

Windsor

Question 1

Golden Quarter

When will consumer

spending return to pre-

pandemic levels?

January 2021 | 3

Review of 2020


Despite a dramatic 2020, retail fared better than most other sectors…

Golden Quarter

Source: ONSUK GDP for selected industry sectors, 2020

-

20

40

60

80

100

120

Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Public admin and defence Wholesale & retail Financial services Construction

Manufacturing Arts, Entertainment and Recreation Accommodation and food service

January 2021 | 5

…but not all categories did well…

Golden Quarter

Source: ONSWeekly retail sales by category, Jan-Nov 2020

20

40

60

80

100

120

140

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Grocery stores Household goods Dept & variety stores Other speciality retail Clothing & footwear

January 2021 | 6

…whilst lockdown closed stores, online saved the day…

Golden Quarter

Source: ONSWeekly in-store sales, Jan-Nov 2020

50

70

90

110

130

150

170

190

210

230

250


Grocery stores Household goods Dept & variety stores

Other speciality retail Clothing & footwear

10

30

50

70

90

110

130


Grocery stores Household goods Dept & variety stores

Other speciality retail Clothing & footwear

January 2021 | 7

Weekly online sales, Jan-Nov 2020

…particularly in the run up to Christmas

Golden Quarter

Source: PwC Consumer Survey, December 2018-20Proportion of spend online vs in-store

47% 45%

29%

63%

8%

53% 55%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec 18 Dec 19 Dec 20

All online

Online / click & collect

Online / home delivery

In-store

January 2021 | 8

Retailers delivered online, even if parcel carriers struggled

Golden Quarter

Source: PwC Consumer Survey, December 2020

Thinking about your Christmas and ‘Black Friday’ shopping, did you

encounter difficulties when shopping online?

68%

35%

22%

65%

29% 28%

No problems Proposition Delivery

%

of

resp

on

den

ts

Dec 18 Dec 20

Poor product

offering, slow

website, lack of

promotions, higher

prices compared to

in-store etc.

Late delivery,

difficult to return

items, receiving the

wrong items / items

were missing etc.

January 2021 | 9

“Seven years of online growth in seven weeks”

Golden Quarter

Proportion of retail sales online, 2018 – 2020 Source: ONS

17.1%18.1% 18.8% 19.8% 19.5%

33.9%

27.8%31.4%

5.5% 5.6% 5.4% 5.5% 5.4%

11.2% 10.3%

25.8%27.6% 28.9% 30.2% 30.0%

58.7%

40.3%

47.8%

0%

10%

20%

30%

40%

50%

60%

70%

Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Oct 2020

All retail Grocery Implied non-grocery

January 2021 | 10

Lockdown had a devastating effect on footfall

Golden Quarter

Source: BRC Springboard and BRC ShopperTrak% change in footfall by location during 2020

(100%)

(80%)

(60%)

(40%)

(20%)

0%

20%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

High street Out-of-town Shopping centre

January 2021 | 11

Chain store closures were already accelerating, but worse to come

Golden Quarter

Source: PwC and LDC surveyStore openings and closures

(2,001)

(659)

(2,848)(3,509)

(6,001)

5,194 5,794

4,463 5,008 5,119

7,195 6,453

7,311

8,517

11,120

(8,000)

(6,000)

(4,000)

(2,000)

-

2,000

4,000

6,000

8,000

10,000

12,000

H1 2016 H1 2017 H1 2018 H1 2019 H1 2020

Net Change Openings Closures

January 2021 | 12

So what defined Christmas?


Consumer sentiment recovered quickly from the initial shock…

Golden Quarter

Source: PwC Consumer Sentiment SurveyNet consumer sentiment during 2020

Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21

+3 Post-election

-26 1st lockdown

-14-12 -11

Non-essential

shops reopen -1

End of “Eat out

to Help Out”-10

2nd

lockdown

-6

3rd lockdown &

UK leaves EU

January 2021 | 14

…and still far stronger than the global financial crisis

Golden Quarter

Source: PwC Consumer Sentiment SurveyNet consumer sentiment over time 2008 – 2021

-65%

-55%

-45%

-35%

-25%

-15%

-5%

5%

15%

25%

35%

Ap

r 20

08

Jun

20

08

Au

g 2

008

Oct

20

08

Nov 2

008

Fe

b 2

009

Ma

y 2

00

9

Oct

20

09

Jan

20

10

Ma

y 2

01

0

Jul 20

10

Oct

20

10

Dec 2

010

Jan

20

11

Ma

y 2

01

1

Se

p 2

011

Dec 2

011

Ma

y 2

01

2

Se

pt

20

12

Jan

20

13

Ma

y 2

01

3

Se

pt

20

13

Jan

20

14

Au

g 2

014

Nov 2

014

Jan

20

15

Ap

r 20

15

Se

pt

20

15

Nov 2

015

Dec 2

015

Ma

r 2

01

6

Jul 20

16

Se

p 2

016

Dec 2

016

Ma

r 2

01

7

Jun

20

17

Se

p 2

017

Dec 2

017

Ap

r 20

18

Se

p 2

018

Dec 2

018

Ap

r 20

19

Se

p 2

019

Dec 2

019

Ma

r 2

02

0

Ap

r 20

20

Ma

y 2

02

0

Jun

e 2

02

0

Se

pte

mb

er

20

20

No

ve

mbe

r 20

20

Jan

uary

20

21

Much better off than last year

Somewhat better off than last year

Much worse off than last year

Somewhat worse off than last year

Balance of opinion

January 2021 | 15

Ju

n 2

02

0

Se

p 2

02

0

Nov 2

02

0

Ja

n 2

02

1

Promotional activity was used to drive traffic online…

Golden Quarter

Source: PwC UK promotions tool and PwC researchComparison of online promotions vs previous years

40%

85%

50%

59%

90%

65%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-2 weeks BF/CM + 1 week

FY17-19 avg. FY20

January 2021 | 16

Interest in Black Friday declined from…

51%

pre-2nd

lockdown

announcement

38%

post-2nd

lockdown

announcement

Boxing

dayBlack

Friday

…with many retailers offering discounts…

Golden Quarter

Source: PwC UK promotions toolDaily promotions in the run up to Christmas

0%

20%

40%

60%

80%

100%

January 2021 | 17

…albeit more selective than the deep headline discounts suggested

Golden Quarter

Depth of online general merchandise and fashion promotions offered Source: PwC UK promotions tool

General merchandise

Population:

General merchandise: 57 retailers for BF 2019 and 25th May, 87 retailers for BF 2020

Fashion: 110 for BF 2019 and 25th May, 119 for BF 2020

Fashion

8.9% 16.4%

9.2%

56.3% 36.4% 48.7%

28.6%

40.9% 28.6%

6.3% 6.4% 13.4%

0%

20%

40%

60%

80%

100%

BF2019

25th Maybank hol

BF2020

61% +

41% - 60%

1% - 40%

None

14.0%26.3%

10.3%

56.2% 31.6%

46.0%

22.8%38.6%

36.8%

7.0% 3.5% 6.9%

0%

20%

40%

60%

80%

100%

BF 2019 25th May bank hol BF 2020

61%+

41% - 60%

1% - 40%

None

January 2021 | 18

Disposable income didn’t constrain spending, so what did?

Golden Quarter

Reasons for spending less than last year on

Christmas shopping and celebrations…

Reasons for spending the same or more than last

year on Christmas present shopping and

celebrations…

50%

37%32% 30%

Celebrated lessoutside home

Saw fewer people Entertained less athome

Fewer gifts to buy

39%34%

25%23%

More / same numberof people to buy for

More/ the sameamount of money to

spend

Saved money from notgoing on holiday /

going out

Tried to makeChristmas more

special

January 2021 | 19


Reasons for spending the same or more than last

year on Christmas shopping and celebrations…

Fewer guests to host and smaller celebrations

Golden Quarter


Compared to last year, how much did you spend on Christmas shopping and

celebrations this year?

24%

43% 35% 32%

18% 14% 13%

-33% -30%-37%

-30%-37% -34% -33%

Total 18-24 25-34 35-44 45-54 55-64 65+

More than last year Less than last year

Average

spend£385 £301 £350 £403 £465 £384 £383

January 2021 | 20

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

50%

60%

So how has this been reflected in results so far?

Golden Quarter

Source: Company trading statementsOverview of Christmas trading results, 2020

January 2021 | 21

Fashion

General merchandise

Grocery and food

Note: shading indicates

total sales rather than LfL

Median: 9.3%

BRC Dec-20 results

Total sales growth: 1.8%

LfL sales growth: 4.8%

The largest gap between winners and losers has emerged

Golden Quarter

Source: Company trading statementsStandard deviation between retailers’ LfL results

Year Standard

deviation

2016 11

2017 13

2018 19

2019 9

2020 38

January 2021 | 22

-

5

10

15

20

25

30

35

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Grocery was one of the winners, driven by volume…

Golden Quarter

Source: BRCBRC LfL sales, inflation and volumes (Oct-Dec avg.)

Food

2016 2017 2018 2019 2020

LfL sales

growth1.1% 2.6% 0.6% 0.0% 6.1%

Inflation(0.9%) 1.8% 1.5% 1.5% (1.6%)

Implied LfL

volume2.0% 0.8% (0.9%) (1.5%) 7.7%

Total

volumes3.3% 2.4% 0.3% (0.8%) 8.3%

January 2021 | 23

...with record sales both in-store and online

Golden Quarter

Grocery sales, non-seasonally adjusted, Jan 2020 = 100 Source: ONS

January 2021 | 24

80

100

120

140

160

180

200

220

240

Dec 2018 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020 est.

In store OnlineIn-store

This was at the expense of hospitality

Golden Quarter

Source: Coffer Peach Business TrackerCoffer Peach Tracker LfL growth %

(100%)

(80%)

(60%)

(40%)

(20%)

0%

20%

Restaurants Pubs

Nationwide

lockdown

2018 2019 2020

Restaurants (0.8%) 1.1% (24.2%)

Pubs 1.6% 0.8% (30.5%)

Combined 0.5% 0.9% (29.0%)

January 2021 | 25

Note: Total sales growth % recorded in Jul-20 and Nov-20

Grocers had their best Christmas in recent history

Golden Quarter

Source: Company trading statements, KantarChristmas trading grocery growth, 2019 vs 2020

January 2021 | 26

Notes:

• Aldi, Lidl and Heron Foods have

revised LfL in 2019

• Iceland, Asda, Waitrose and Co-op

data is from Kantar estimates

• Sainsbury’s results are Grocery only

• M&S Food has been adjusted in 2020

to exclude cafés (2.2% LfL increase

including cafés)

• Shading indicates total sales or Kantar

estimate

Big Four Convenience / otherDiscount High end

(1.7%)

0.1%

(1.3%)

0.4% 1.3% 3.2%

0.2% 2.7%

0.4% 1.4% 3.0%

4.5% 2.3%

9.3% 8.1% 7.8% 7.4%

20.8%

17.9%

10.6%

15.7%

11.7%

5.7%

9.8% 7.7%

(8.3%)(10%)

(5%)

0%

5%

10%

15%

20%

25%

Morrisons Tesco Asda Sainsbury's Iceland Lidl Aldi Booths Waitrose M&S Food Co-Op HeronFoods

Booker

2019 2020

What defined the winners and what will stick?

Golden Quarter

What won at Christmas What will keep winning What the jury’s still out on

• Meeting immediate demand

• “Fix what’s in front of

you”

• Online capacity

• Encouraging sticky behaviour

• Building baskets

• Weaker 2019 comparatives

• Doing the basics right

• Pricing and availability

• Store / online standards

• Being where customers want

you

• Convenience

• Online

• SKU rationalisation

• “Proliferation temptation”

• Treating and trading up

• Innovation in a downturn

• Fighting for share of stomach

• Vs eating out and

delivery

January 2021 | 27

Tough comparatives will make 2021 harder

0.3%

(5.4%) (5.7%)

7.9%

1.3%

14.0%

5.0%

(2.0%) (3.9%)(1.0%) (0.6%)

21.1% 19.9% 16.9%

11.7% 11.0% 10.8% 8.0% 6.0%

(11.5%)

(33.0%)(38.1%)

(50%)

(30%)

(10%)

10%

30%

50%

Moonpig AO The HutGroup

B&M Topps Tiles DFS Pets atHome

Kingfisher Halfords HotelChocolat

Dunelm Dixons UKElectricals

Sainsbury'sGM

Boots WHSmith CardFactory

2019 2020

Strong demand for general merchandise, but only multi-channel could deliver

Golden Quarter

Source: Company trading statementsChristmas trading general merchandise growth, 2019 vs 2020

January 2021 | 28



“High

teens”

135.0% 67.2% 51.0%

19.0%

42.0%

18.0%

6.1%

14.0%

(4.5%)

5.2%

(4.0%)

0.6%

(1.7%)

1.0%

(15.8%)

4.5%

40.0% 36.0%

32.0%

25.5% 17.0%

5.0% 0.3%

(1.1%)

(8.9%) (11.2%)

(24.1%)

(4.3%)

(27.2%)(30.0%)

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

50%

In theStyle

boohoo ASOS UK StudioRetail

The VeryGroup

Seasalt JD Sports Joules Next N Brown Matalan M&SClothing

and home

Burberry Superdry Primark

2019 2020

Pureplay online continues to be the winner in fashion

Golden Quarter

Source: Company trading statementsChristmas trading fashion growth, 2019 vs 2020

January 2021 | 29



169.0%

Will the “Roaring Twenties” rejuvenate fashion demand?

Golden Quarter

What did we see in 2020 What will 2021 bring? What will stick longer term?

• Fewer reasons to shop and

higher promotions

• Access

• Digital and fulfilment

• Credit

• Dress for me

• Comfort categories and

colour palette

• Relaxed silhouettes and

tactile “luxe” fabrics

• Above the keyboard

accessories

• Diminished demand and

considered purchasing…

• … but fashion celebrations

• Less is more

• Complexity, discounting,

smarter stock, right-

sizing

• Continued collaboration

across supply chain

• Opportunistic M&A

• Access

• Inclusiveness:

from PTM to BLM

• Credit

• Modernised communication

• Role of store

• Gamification

• Circular fashion 2.0

• Market shake out and

partnerships

January 2021 | 30

So what defined 2020 for retail?

Golden Quarter

Previously… Learnt new disciplines Doing the right thing

• Five Cs still matter:

• Channel

• Convenience

• Curation

• Communication

• Credit

• What COVID-19 brought into

focus:

• Be where your customers

want you

• Your people are your

secret weapon

• Winners were fleet of foot

• Collaborations were

rewarded

• More important than ever

• For your people

• For your customers

• Government support

• Sustainability

January 2021 | 31

Question 2

Golden Quarter

Thinking about COVID-19

restrictions, when do you

think things will get back to

“normal”?

January 2021 | 32

Economic outlook

Golden Quarter

Despite global growth of 4.7% in 2021, the recovery will be uneven across sectors, countries and income levels


Source: PwC analysis

Projected size of selected economies in 2020 compared to their

pre-pandemic levels, %

2020e (%) 2021p (%) 2022p (%)

-3.9 4.7 3.7Global (MER)

Rebound of consumer spending in Q3, driven mainly by 17.4% growth in retail sales


Source: ONSGrowth in GDP by expenditure, %, Q1 – Q3 2020

After bumpy months, recovery is expected to start as early as February


Source: PwC analysisReal GDP index and month-on-month changes, Q4 2019 =100

Jul

2020

The economy is not expected to recover to pre-pandemic levels until at least late 2022


Source: PwC analysisReal GDP index, quarterly levels in each scenario, Q4 2019 =100

-9.5%

-11.0 2.2 5.1Slow recovery

scenario

Annual real

GDP (%)2020e 2021p 2022p

-11.0 4.8 6.3Quick recovery

scenario

2023p

2.0

1.7

We expect the UK GDP to grow

by 2.2%-4.8% in 2021, supported

by release of pent-up demand,

mass vaccination, consumer

savings and business adaption

Economic recovery and Brexit will put upward pressure on inflation, but expected to stay below long term averages


Source: ONS, BoE

estimates for 2020,

PwC scenarios for 2021

November CPIH by component,

% change from previous year

12-month CPHI and CPI, % change

from previous yearSource: ONS

Q4 2020e (%) 2021p (%)

1.4 1.4 – 1.5Inflation (CPI)

Inflation is expected

to pick up from 0.6%

in November to

1.4%-1.5% in 2021

Retail and wholesale are expected to rebound in 2021 after a sluggish Q1


‘Quick recovery’ scenario ‘Slow recovery’ scenario Source: PwC analysis

Projected GVA average annual growth rates by scenario, %

We expect consumer spending growth in 2021 will be driven by multiple, opposing factors


Increased unemployment

End of the furlough scheme in April and job security

concerns squeeze household spending

Low interest rate environment

Household credit, especially secured loans on housing, will

benefit from ultra-low interest rates of 0.1%

Slowdown in housing market

End of stamp duty holiday will have downward impact on

property spending

Large consumer excess savings

Release of £100bn excess savings due to lockdowns has

upward impact on retail growth in 2021

Demographic changes

Drops in birth rates and immigration drag on spending in the

long run

The outlook for

consumer spending

in 2021

will depend on how the

combined impact of

those drivers affects

future spending

Key takeaways for the economy and consumer spending


Global economy is expected

to recover at a record rate in

2021 led by China, but most

countries will remain below

pre-crisis levels through

2021

UK economy is expected

to recovery strongly from

Q2 2021 once lockdown

measures are released.

Most hard hit sectors will

return to growth, but

unemployment, business

fragility and weak business

investment will drag on

final recovery to pre-

COVID-19 levels

Consumer-led recovery

fuelled by the release of

£100bn involuntarily

accumulated savings and

record low interest rates…

but risks of unemployment,

slowdown in housing market

and demographic changes

weigh down on growth.

1 2 3

Consumer outlook

Golden Quarter December 2020 | 42

We hoped we wouldn’t have to raise Brexit in 2021…

Golden Quarter

Percy Pigs could be under

threat

Ready meals and fresh fruit

experiencing disruption

due to Brexit

Increase of missing

items and substitutes

Brexit tariff costs of

c.£15m in 2021

Brexit trade deal set to

significantly impact

EU stores

Shoppers face £5 fees on

fashion items as Brexit

causes delays

“ “ “

“ “ “January 2021 | 43

Where not to get caught out? Some examples…

Golden Quarter

• Don’t underestimate paperwork

• Outsourcing may not be a solution –

experts in short supply

• Careful not to alienate customers by

landing them with a fine, or expensive /

complex returns

• Don’t lose cross-border opportunities

indefinitely

• Is it worth the cost of a bonded

warehouse or separate distribution

solution in Europe?

January 2021 | 44

Brexit increasingly affecting consumers’ spending choices

Golden Quarter

Do you think Brexit has affected or will affect the way you spend or save money over the next 12 months?

27% 28% 38%

13% 8%

11%

60% 65% 51%

Dec 18 Dec 19 Dec 20

Did not change and will not change

Did not change in last 12 months, but will change in next 12 months

Did change in last 12 months

Over the years… By age group…

60% 56% 42%

33% 26% 27%

10% 6%

9% 13%

14% 12%

30% 38%

48% 55% 60% 62%

18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65+

Did not change and will not change

Did not change in last 12 months, but will change in next 12 months

Did change in last 12 months

January 2021 | 45

Source: PwC Consumer Sentiment Survey, December 2018-20

The young are still the most optimistic overall…

Golden Quarter

Thinking about your disposable income, in the next 12 months do you

expect that your household will be? Source: PwC Consumer Sentiment Survey, January 2021

22%

41%35%

21% 18%11%

17%

-28% -27% -29% -32% -31% -33%

-21%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

All 18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65+

Better off than last year Worse off than last year Balance

January 2021 | 46

…despite over-65s being least financially affected by the pandemic

Golden Quarter

Since the coronavirus pandemic began in March, have your household

finances been affected in any of the following ways? Source: PwC Consumer Sentiment Survey, January 2021

16% 25% 23% 23%

17% 15% 2%

28%

37%33% 32%

29%28%

15%

35%

16%22% 28%

32% 42%

55%

21% 21% 22%17% 21%

15%

28%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All adults 18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 plus

Saved more

Not affected

Other financial loss or cutback

Lost some/all income

January 2021 | 47

Lockdown 3.0 hasn’t affected consumer sentiment as much

Golden Quarter


expect that your household will be? Source: PwC Consumer Sentiment Survey, January 2021

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

18 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65+

Mar 20 Jan 21

January 2021 | 48

When will things get back to normal?

Golden Quarter


6%

25%

30%

12%

27%

By Easter 2021 By summer 2021 By autumn 2021 By Christmas 2021 Not until 2022 or later

% o

f re

sp

on

den

ts

By Easter

2021

By summer

2021Not until

2022 or later

By autumn

2021

By Christmas

2021

Thinking about the restrictions due to COVID-19, when do you think

things will get back to “normal”?

January 2021 | 49

We miss holidays almost as much as we miss our friends

Golden Quarter

What are you most looking forward to doing once you are allowed to? Source: PwC Consumer Sentiment Survey, January 2021

0%

10%

20%

30%

40%

50%

60%

70%

80%

Friends & family Holiday Restaurant Non-essentialshopping

Pub Live events Cinema Gym

Top choice 2nd choice 3rd choice

Change in

interest vs.

June 2020

January 2021 | 50

Holidays

On balance, we’ll rein in our spending on every category

Golden Quarter

How do you expect your spending to change on the following categories in

the next 12 months? Source: PwC Consumer Survey, December 2020

18% 21%9%

22%11% 12% 13%

20%14%

21%10%

-11%-19% -15%

-29%-20% -22% -23%

-34% -29%-37%

-26%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Groceryshopping

Improvinghome

Children andbabies

Holidays Beauty andpersonal care

Health andwellbeing

Technology Going out Clothing,shoes,

accessories

Eating out "Big ticketitems"

Spend more Spend less Net spending intention

January 2021 | 51

It’s not about trading down, it’s about buying less

Golden Quarter

Trade downDo less SwitchKey:

Grocery Clothing Holiday travel

24% Shop around more

24% Buy more own label

21% Buy more in the sales

12% Buy second hand

15% Travel in UK instead of abroad

12% Look out for promotions

28% Waste less

25% Buy more special offers

31% Buy fewer items

27% Shop less often

26% Won’t go on holiday

24% Wait till pandemic is clearer

28% Will not cut back 23% Will not cut back 17% Will not change plans

January 2021 | 52

How big will the bounceback be in 2021?

Golden Quarter

YoY % market growth, total Source: GlobalData

9.1%3.9% 3.9%

-5.0%

-13.1%-17.7%

-27.4%

-0.9%-3.6%

4.3% 5.4%

12.7% 12.3%

19.9%

Food & Grocery Electricals DIY & Gardening Homewares Furniture &Florcoverings

Health & Beauty Clothing & Footwear

2019-20 2020-21

Stabilise Boom? Bounceback?

January 2021 | 53

Furniture &

Floor coverings

Will shoppers return to stores?

Golden Quarter

YoY % market growth in-store Source: GlobalData

2%

-37%

-1%

-14%-23% -24%

-51%

-4%

28%

7% 3%

14% 13%31%

Food &Grocery

Electricals DIY &Gardening

Homewares Furniture &Florcoverings

Health &Beauty

Clothing &Footwear

91%

40% 40% 44%

23%

38%30%

21%

-16%-10%

14% 10% 8% 10%

Food &Grocery

Electricals DIY &Gardening

Homewares Furniture &Florcoverings

Health &Beauty

Clothing &Footwear

2019-20 2020-21 2019-20 2020-21

January 2021 | 54

YoY % market growth online

Furniture &

Floor coveringsFurniture &

Floor coverings

Local and independents playing a bigger role post-COVID

Golden Quarter

Thinking about the below activities as a result of the pandemic, how has

your behaviour changed compared to “normal” times? Source: PwC Consumer Survey, December 2020

Buy more from smaller businesses instead of big brands

Buy more from local high street store

Shop more online for non-groceriesSpend more on improving my home

Spend less on clothing and footwear

Shop more online for groceriesSpend more on my petsBuy essential goods in larger

quantities / stock-upDelay / avoid booking a holiday

Order more from food delivery services30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

50% 55% 60% 65% 70% 75% 80%

Will d

o t

his

wh

en

th

ing

s g

et

back t

o

no

rmal

Did this during the pandemic

Sticky behaviour

January 2021 | 55

But what does this mean for retail overall?

Golden Quarter

Evolution of the store Doing the right thing Investments and

partnerships

• Integral to shopping journey

• Pent-up demand post-

lockdown(s)

• Multichannel comes into its own

• More to be done to

integrate and optimise

channels

• How to measure importance

• Not just P&L

• Value to customer

• Not just for Christmas, or in a

pandemic

• Recognise, reward and

develop your people

• Retailers’ role in society

• Year of inflexion for ESG

and Net Zero?

• Customers may or may not

reward you for it… but at least

they won’t punish you

• Local, national or global

champion – where are you

going to play?

• What is your platform to win?

• Can you build resilience?

• Don’t have to do it on your own

January 2021 | 56

Question 3

Golden Quarter

What are the top 3 things on

the minds of retailers in

2021?

January 2021 | 57

Property as we return to business

Golden Quarter

For more information on this topic,

please visit our Real Assets

homepage.

https://www.pwc.co.uk/issues/real-assets.html

Landlords are also feeling the pain

Golden Quarter

The landlords’ perspective

• Landlord pain – lenders likely to start to be more active in

negotiations

• Landlord approach – remains ‘not here to support wealth transfer’

• Rent Collections – many court proceedings expected to log-jam

the system

• Valuations now NOI driven

– Turnover rents less concerning but at the right levels

– Recovery of service charge and reduction in voids a powerful tool

• Impact of Insurance – Supreme Court ruling on ‘pandemic’ clauses’

for hospitality (except reduction in consumer demand and the

government’s actions)

January 2021 | 59

CoStar, Retail National Report, 18/01/2021

With March 2021 rent date fast approaching…

Golden Quarter

Are we approaching the last landlord negotiation?

• March & April are key months – need for pragmatism and

clarity of approach

• Moratorium – currently looks like the lease moratorium won’t

get extended...business rates may be, potentially, but awaiting

the Budget

• Get the backstop in place – CVA / pre-pack is still very much

live, as is the new Director Called Insolvency Moratorium

• Know your power as a driver of footfall / demand. Partnering

in the future to:

– Move units

– Shrink units

– Get access

January 2021 | 60

How can you help fund your re-opening?

Golden Quarter

• Is S&L an option to help cashflow?

• Are regears back on the table?

• Can you amend terms of existing S&L?

• Use of Asset Backed Contributions to fill

the pension gap

Note: Make sure you mitigate and defer

property taxes where relevant

January 2021 | 61

“Ted Baker has struck a £79m sale and leaseback of its London head office”

(Mar ‘20)

“Next has secured the £107 million sale and leaseback of a warehouse

complex in West Yorkshire” (May ‘20)

“Asda’s new owners are preparing to sell and lease back the supermarket’s

distribution centre network for up to a reported £1.2bn” (Dec ‘20)

“H&M has been transferring many of its leases to turnover-based rent…

However, many leases are still on contracted rents, and even in turnover

cases have a base rent” (Nov ‘20)

“John Lewis to build rental homes at 20 of its UK sites...Retailer’s plan is part

of strategy to rebuild profits to £400m within five years” (Oct ‘20)

Are you ready for the opportunities...

Golden Quarter

Freehold vs Leasehold

• Have you or your shareholders got

capital to buy-back property at 10%?

Mitigating the impact of enhanced

online sales

• Repurpose underutilised space

• Enabling click & collect

Planning for buy-side distress

• Are you able to move at pace?

• Do you know what you want?

• How would you integrate?

January 2021 | 62

“Epiris announces acquisition of Bella Italia, Café Rouge and Las Iguanas”

(Jul ‘20).

“Next has agreed a joint venture deal for the Victoria’s Secret UK

business...Victoria’s Secret UK collapsed into administration in June, putting

more than 800 jobs at risk” (Sep ‘20).

“Supermarket giant Asda is set for a significant overhaul that will mimic

department stores by hiring out large parts of its shops to other businesses”

(Oct ‘20).

Digital models

Golden Quarter December 2020 | 63

We’re seeing the emergence, convergence and acceleration of digital models


Monobrand Multi-brand

Vert

ically

inte

gra

ted

Pla

tform

s

Op

era

tin

g m

od

el

D2C

Primary

market

places

Resale

market

places

Aggregators of

3rd party brands

Subscription

Offprice

Customer proposition

What should be in your top 20 digital metrics?

Golden Quarter

Customer journey

January 2021 | 65

Attract Inspire Convert

1. Traffic

2. Traffic mix

(organic vs paid)

3. Search rankings

4. Marketing spend

% sales

5. Marketing mix

(brand vs

performance)

6. Average time

on site

7. Pages views

per visit

8. Bounce rate

9. Check out

completion rate

10. Conversion

11. Number of

orders

12. AOV

13. CPA

Retain Engage

14. Retention

15. CLTV

16. Awareness

17. Affinity

18. Loyalty

19. Advocacy

20. Social media

engagement

Some key learnings from assessing digital models


Driving more effective

performance marketing

Unlocking customer

lifetime value

Scaling technology

capabilities

Appendices


51.0%

40.0% 36.0%

32.0%

25.5% 21.1% 19.9% 19.0% 17.9% 16.9% 15.7%

11.7% 11.0% 10.8% 10.6% 9.3% 8.6% 8.1% 8.0% 7.7% 5.0%

2.6% 0.3%

(1.1%) (4.3%)(8.3%)

(8.9%)(11.5%)

(18.9%)

(24.1%)

(27.2%)(30.0%)

(33.0%)

(38.1%)(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%

50%

60%

Overview of Christmas trading results

Golden Quarter

Source: Company trading statementsOverview of Christmas trading results, 2020

January 2021 | 68

Fashion

General merchandise

Grocery and food



169.0%135.0%

67.2%

(66.4%)

“high teens”

Consumer sentiment by region

Golden Quarter


expect that your household will be...? Source: PwC Consumer Sentiment Survey, January 2021

26% 26% 24% 26% 24% 24% 22% 21% 22%17%

20% 19%

-26% -28% -27% -29% -28% -29% -27% -28% -30%-25%

-31% -30%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

North West London West Midlands NorthernIreland

Scotland Wales East Midlands North East South West East ofEngland

South East Yorkshire andthe Humber

Better off than last year Worse off than last year Balance

January 2021 | 69

Consumer sentiment in lockdown 1.0 vs 3.0 by region

Golden Quarter


expect that your household will be...? Source: PwC Consumer Sentiment Survey, January 2021

-45%

-35%

-25%

-15%

-5%

5%

North West London WestMidlands

NorthernIreland

Scotland Wales East Midlands North East South West East ofEngland

South East Yorkshire andthe Humber

Mar 20 Jan 21

January 2021 | 70

Christmas spending by region

Golden Quarter

Compared to last year, how much did you spend on Christmas shopping and

celebrations this year? Source: PwC Consumer Survey, December 2020

42%

20% 32%

25% 26% 16%

34% 21% 20% 19% 24% 18%

-27% -21%-33% -30% -33%

-26%

-43%-31% -31% -31%

-38% -40%

NorthernIreland

Scotland North East Yorkshire andHumberside

WestMidlands

Wales London East Midlands North West South West South East East ofEngland

More than last year Less than last year

Average

spend £496 £484 £400 £393 £360 £434 £374 £341 £438 £317 £364 £326

January 2021 | 71

Christmas shopping channels by region

Golden Quarter

Proportion of spend online vs in-store Source: PwC Consumer Survey, December 2020

23% 25% 26% 27% 27% 28% 28% 28% 33% 33% 38% 47%

68% 69% 67% 68% 64% 63% 63% 59% 63% 59% 52%

47%

9% 6% 8% 5% 9% 9% 9% 13% 5% 7% 10% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

West Midlands Wales Yorkshire andHumberside

North West East Midlands South East East ofEngland

London Scotland South West North East NorthernIreland

In-store Online / home delivery Online / click & collect

January 2021 | 72

Christmas shopping: sustainability considerations

Golden Quarter

% of respondents who considered sustainability / environmental factors in

their Christmas shopping Source: PwC Consumer Survey, December 2020

41%

61%55%

48%

35%29% 29%

Total 18-24 25-34 35-44 45-54 55-64 65+

Top 3 factors considered:

• Buying sustainable / eco-conscious gifts 37%

• Buying from a charity shop 26%

• Gifting homemade presents 26%

January 2021 | 73

When will things get back to normal – by region?

Golden Quarter

Thinking about the restrictions due to COVID-19, when do you think things

will get back to “normal”? Source: PwC Consumer Survey, December 2020

43%38% 35% 31% 30% 29% 28% 28% 27% 26% 25% 24%

27%

24% 28%27%

44%36%

23%

39%29% 35%

28%37%

11%

12% 9%12%

10%

11%

12%

8%16%

15%

15%

12%

20%26% 28% 30%

16%24%

36%26% 28% 24%

32%27%

West Midlands Scotland London East ofEngland

North East East Midlands Yorkshire andHumberside

Wales South East NorthernIreland

North West South West

By summer 2021 By autumn 2021 By Christmas 2021 Not until 2022 or later

January 2021 | 74

Outlook for beauty:Self-care and health integral to the future of beauty

Golden Quarter

What we’ve seen Bounceback Future

1. Health and wellbeing, with

focus on care

2. Rise of natural, eco-ethical

and cruelty-free

3. Focus on simplicity

4. Digitalisation, with one-on-one

consultations

1. Led by the eyes

2. Continued focus on natural

and brands with purpose

3. Return to salons for the

“natural look”

1. Shift from colour and

fragrance to self care

and skincare

2. Digital is now mainstream

3. Role of the store evolves with

use of technology, even QR /

VR / AR touchpoints?

January 2021 | 75

Cutting back in grocery:Discounters won’t benefit as much as in the last recession

Golden Quarter

How do you think your grocery shopping habits will change over the

next 12 months? Source: PwC Consumer Survey, December 2020

28%

25%24% 24%

17%16% 15%

12%

28%

Waste less Buy more productson special offer/

promotion

Shop around morefor cheaper prices

Buy more ownlabel

Buy fewer items Buy more fromcheaper ranges/

brands

Use a cheaperstore for some

shopping

Use a cheaperstore for allshopping

Will not cut back

% o

f re

sp

on

de

nts


January 2021 | 76

Cutting back in fashion:Fashion demand will remain muted in 2021

Golden Quarter

How do you think your clothes shopping habits will change over the

next 12 months? Source: PwC Consumer Survey, December 2020


31%

27%

21%

12% 11%10%

8%6% 5%

4%

23%

Buy fewer itemsShop less often Buy more salesitems

Buy secondhand

Researchonline beforeshopping in

store

Buy in discountstores

Buy cheaperoptions in thesame stores

Buy smalleritems

Stop goingclothes

shopping

Use clothingsubscription

services

Will not cutback

% o

f re

sp

on

de

nts

January 2021 | 77

pwc.com

Thank you

© 2021 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopers International

Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any

other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the

exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the

exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.

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Documents

Retail and Consumer Briefing - PwC...Golden Quarter Christmas trading grocery growth, 2019 vs 2020 Source: Company trading statements, Kantar January 2021 | 26 Notes: • Aldi, Lidl