How Retailers are Dealing with the Second Wave of Covid-19

How Retailers are Dealing with the Second Wave of Covid-19

Written by Sufiana SharuddinOctober 13, 2020

How Retailers are Dealing with the Second Wave of Covid-19

A number of countries have implemented heightened social distancing regulations in August and September as the second wave of Covid-19 cases resurges in Asia Pacific and Europe. Once again these restrictions will have an immense impact on consumers and the retail industry. Physical stores are only allowed to operate at a limited capacity to curb the spread of the novel coronavirus.

Businesses had only begun to recover as stores reopened and consumer confidence grew when lockdown restrictions were eased earlier this year. However, the resurgence of Covid-19 may reverse these effects altogether.

Most businesses barely survived the first large-scale lockdowns as shopping reduced dramatically, resulting in the bankruptcy of famous retailers in the U.S. such as J.C Penny and Neiman Marcus, who were already suffering from slow trade even prior to the pandemic. While much of shopping has shifted online, e-commerce has yet to fill the gap left by physical stores.

As the impact of the second wave of Covid-19 cases grows more severe, brands and retailers will need to be prepared and develop contingency plans to drive consumption, especially for the holiday season that is soon approaching.

We gathered retail insights from countries currently experiencing a resurgence of Covid-19 such as France, Indonesia, South Korea and Australia, to understand what consumers are buying during this period.

Second Wave Trade Movement by Country

Trade performance of multi-brand online retailers in France and Australia during the second wave of Covid-19.

Trade performance of multi-brand online retailers in France and Australia from 1 – 31 August 2020. Source: Omnilytics dashboard

France and Australia

The surge of cases in Australia and France began in late July and August respectively.

Australia’s second wave of infections was mainly concentrated in the state of Victoria due to an outbreak in Melbourne, which lasted through August. As depicted in the chart above, sell-out rates at major online retailers across segments remained stable throughout the analysis, albeit a small dip in sales in the last week of August as the number of cases reduced. 

France’s second wave began in mid-August due to an influx of tourism over the summer. The government has also implemented localised regulations in worst-hit areas such as Paris and Marseille. Online trade in August was volatile as sell-out rates for the month closed at a mere 18.26% despite a high number of discounted SKUs. 

South Korea and Indonesia

Trade performance of multi-brand online retailers in South Korea and Indonesia during the second wave of Covid-19.
Trade performance of multi-brand online retailers in South Korea and Indonesia from 1 – 31 September 2020. Source: Omnilytics dashboard

The second wave of Covid-19 cases in South Korea and Indonesia was detected in late August and September respectively.

Cases in South Korea’s capital, Seoul, had tripled within a month, triggering social distancing regulations Level 2.5, which include a stricter curfew and limited capacities for stores. Sell-out rates at major online retailers such as Somethin’ Sweet and Chuu surged a week after the regulations were imposed but took a nosedive for the rest of the month.

In mid-September, the Indonesian government implemented a similar regional lockdown for Jakarta, shortly after lifting the initial lockdown. Sell-out rates, although low, remained stable for most of the month but further declined by 2% in the last week of September.

Trending Products 

Uptrending products in Australia, France, Indonesia and South Korea during the second wave of Covid-19.
Uptrending products in Australia, France, Indonesia and South Korea from July to September. Source: Omnilytics dashboard

In the southern hemisphere, Australia’s cases surged as the country was coming out of winter. Consumer demand skewed heavily towards non-apparel products as data showed accessories, bags and activewear as the top three categories. Trending accessories include hats and socks, which were in line with the local weather. Activewear, a staple during the height of the pandemic has declined in popularity slightly. However, consistent demand for the category allows it to be among the bestsellers.

In France, bags and activewear were also trending with the addition of tops. Tops were the heaviest stocked category across the retailers mentioned earlier with casual styles performing best. Consumers mainly bought T-shirts, tank tops, crop tops and camis during this period. For activewear, sneakers, tops and shorts were the key subcategories driving sell-out.

Over in Indonesia, we see activewear once again along with jewellery and ethnicwear. Demand for ethnicwear has remained consistent since Eid al-Adha, a major celebration for the country which occurred at the end of July. Despite being two-months post the celebration, a whopping 69% of the sell-out rate for this category was attributed to full price purchases.

The trending products in South Korea differed greatly to the other markets. Apparel such as dresses and jeans were among the bestselling categories. As the third heaviest stocked category in the market, dresses performed extremely well during the second wave. Key contributing styles include A-line, shirt dresses and wraps. Surprisingly, the demand for jeans also surged – nearly every style of jeans were uptrending with the exception of the flare cut.

Discounting and Promotions

Despite the demand volatility caused by the second wave of Covid-19 cases, retailers in each market avoided deep discounts to push sales. The average discount depth across all markets was 38%.

Average discount and percentage spread at retailers in Indonesia.
Average discount and percentage spread at retailers in Indonesia from 1 – 31 September 2020. Source: Omnilytics dashboard

Indonesia recorded the highest average discount at 40% while France and Australia stayed within the 35-38% range. South Korea had the lowest average discount percentage with Aland being the only retailer to offer price slashes beyond 20%.

Major sales events in Australia.
Major sales events in Australia. Source: Omnilytics dashboard

Major sales that occurred during this period was the 10.10 sale, which many Indonesian retailers participated in. Meanwhile, promotions in Australia were propelled by the winter sales and Australian father’s day, which was on September 6th.

The number of new-in vs first discounted SKUs in South Korea.
The number of new-in vs first discounted SKUs in South Korea. Source: Omnilytics dashboard

Although South Korean retailers avoided markdowns, our data showed September had a high number of newly discounted SKUs since July, during the summer sales.

Second Wave Covid-19 Retail at a Glance

Three key lessons from retail during the second wave of Covid-19 cases are,

  • Australia was the best-prepared market during this period as retailers maintained stable sell-out rates throughout the month, further prompted by a healthy combination of full price and discounted sales. 
  • Trending products showed non-apparel and activewear products as the most common categories across the four markets. Higher demand for accessories and jewellery can be attributed to ‘zoom dressing’ which focuses on styling the upper body only. Activewear continues to trend as the home workout phenomenon carries into the second wave of the pandemic.
  • The 20-50% off range was the average discount spread among the markets. Retailers in Australia recorded a strong sell-out rate for the 20-39% off range in particular.

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