The loss of retail sales in Asia Pacific is predicted to reach US$767 billion in 2020, a decline of 10% from 2019, according to a new report from Forrester.
China is the worst affected country in the region, with US$192 billion of retail sales (excluding restaurants, automobiles, and gasoline) lost from January to February 2020 as compared to the same period in 2019. The firm expects a drop of US$658 billion for the full year of 2020 when compared to 2019, equalling a 14.7% decline in retail sales.
Meanwhile, the impact on India and Japan will be severe due to the strict lockdown in India, the declaration of a state of emergency in Japan, and the postponement of the 2020 Summer Olympics.
In Australia, retail sales saw a surge of 0.5% in February 2020 due to the combination of panic buying when the COVID-19 outbreak started in March and a flattening of the curve in April.
Global retail hit hard by COVID-19
The new report forecasts that global retail sales in 2020 will decline by an average of 9.6% globally, a loss of US$2.1 trillion, while global offline sales of nonessential items will contract by 20%.
Retailers will continue to face growth constraints, with a lot of brick–and–mortar retailers predicting losses in 2020. Many will also assume that their growth in online sales will not be enough to offset the lost sales from store closures.
Additional findings include:
- It will take four years for retailers to overtake pre-pandemic levels.
- The likelihood is that the epidemic will last seven months, and from 2021 retail categories that have declined by more than 10% will only bounce back to 90% of pre-pandemic spend.
- Online sales will remain flat in 2020 compared to 2019, and an average of US$360 billion in online retail sales will be lost globally in 2020 compared to Forrester's pre-COVID-19 forecasts.
Michael O’Grady, principal forecast analyst at Forrester described COVID-19’s impact on the global retail landscape as “significant”, particularly with non-essential items sold offline, which will be a big challenge for brick–and–mortar retailers.
“Retail categories like grocery and essential consumables are performing well, while other categories like fashion, beauty, and cosmetics are seeing a marked decline in consumer spend,” he said. “Online sales, however, will be more resilient. To navigate the crisis, retailers need to manage their costs and drive their eCommerce sales and services as much as possible.”
Sourced from Forrester