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
Golden Quarter January 2021 | 4
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
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Grocery stores Household goods Dept & variety stores
Other speciality retail Clothing & footwear
10
30
50
70
90
110
130
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 | 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?
Golden Quarter January 2021 | 13
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
Source: PwC Consumer Survey, December 2020
Reasons for spending the same or more than last
year on Christmas shopping and celebrations…
Fewer guests to host and smaller celebrations
Golden Quarter
Source: PwC Consumer Survey, December 2020
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
Note: shading indicates
total sales rather than LfL
“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
Note: shading indicates
total sales rather than LfL
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
Golden Quarter January 2021 | 34
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
Golden Quarter January 2021 | 35
Source: ONSGrowth in GDP by expenditure, %, Q1 – Q3 2020
After bumpy months, recovery is expected to start as early as February
Golden Quarter January 2021 | 36
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
Golden Quarter January 2021 | 37
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
Golden Quarter January 2021 | 38
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
Golden Quarter January 2021 | 39
‘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
Golden Quarter January 2021 | 40
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
Golden Quarter January 2021 | 41
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
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
-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
Source: PwC Consumer Survey, December 2020
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.
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
Golden Quarter January 2021 | 64
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
Golden Quarter January 2021 | 66
Driving more effective
performance marketing
Unlocking customer
lifetime value
Scaling technology
capabilities
Appendices
Golden Quarter January 2021 | 67
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
Note: shading indicates
total sales rather than LfL
169.0%135.0%
67.2%
(66.4%)
“high teens”
Consumer sentiment by region
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
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
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
-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
Trade downDo less SwitchKey:
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
Trade downDo less SwitchKey:
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
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