The coronavirus pandemic has had a significant impact on the UK’s economy, and that includes the retail sector. High streets that were already struggling were hit hard by government restrictions at the height of lockdown.
Many traditional ‘bricks and mortar’ retailers have found it difficult to cope with the changes, but for shops with an established online sales operation, there have been substantial opportunities for growth.
As people were encouraged to stay closer to home, they increasingly turned to the internet for their shopping. A trend that has continued even as lockdown restrictions have eased.
According to the Office for National Statistics, for example, online sales in August 2020 were 52% higher than 12 months previously, with online household goods retailers seeing a massive 79% increase.
That’s not to say we are out of the woods yet. The country’s economy is still fragile and future prospects uncertain. The overwhelming evidence suggests, however, that retailers with strong online propositions should be well-equipped to deal with further challenges in the months ahead.
So how can retailers build a recession-proof business to survive and thrive during any future period of economic uncertainty?
How to survive the next downturn
The retail landscape in 2020 demonstrates why retailers cannot rely solely on bricks and mortar sales if they want to succeed in a recession.
Retail has been changing at an unprecedented speed in the last few years. Even before the coronavirus outbreak, the sector was undergoing a massive restructuring.
In 2019 alone, there were more than 9,000 physical store closures in the UK, along with some 85,000 job losses. Despite this, online sales continued to grow, reaching 21% of total sales in 2019 – a figure that is expected to rise to over 50% by 2024.
High-street-only retailers are likely to be among the biggest casualties of a new recession, unless they can get successful online operations off the ground quickly.
Succeeding in a recession with ecommerce
Ecommerce can help recession-proof your business in a variety of ways.
First, online retail businesses enjoy significantly lower overheads than high street shops. Ecommerce operations don’t need expensive premises in areas of high footfall, so they can make significant savings on rent and business rates. They can also be run with fewer staff members, especially if you can outsource your warehousing and shipping operations.
Running a professional online store isn’t free, but it should be significantly cheaper to set-up and maintain compared to a physical shop.
Secondly, running an online business gives you access to a much broader customer base. While the customer base for a small shop is largely limited to people living in the immediate area, there is virtually no limit on the potential customer base for an online shop. Anyone with an internet connection is a potential customer, from every corner of the UK, or even overseas.
This means that, even if shoppers in your immediate area reduce their spending, customers from elsewhere could fill your order book and help your business survive the next recession.
Finally, online retailers can benefit from thousands of digital services dedicated to raising your profile, attracting visitors to your website and increasing sales. From social media channels like Facebook, Twitter and Instagram to digital publications and conversion optimisation services, there has never been a better time to make money by selling online.
How DivideBuy can help you face the recession
We offer an interest-free credit platform that allows shoppers to spread the cost of their purchases over a period of between 2 and 12 months at no additional cost, either to you or to your customers.
By offering our payment method as part of the checkout process, our retail partners can benefit from increased sales, higher average order values and more revenue – providing a solid foundation for surviving in a recession. It’s the perfect solution for online shops at a time when customers are looking for ways to manage their money and make their purchases more affordable.
For more information about our interest free credit facility and how it can help your business get prepared for a recession, speak to a member of the team today.