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With the COVID-10 pandemic ravaging several industries amid poor consumer spending, global retail sales in 2020 will decline by an average of 9.6 per cent, resulting in a loss of $2.1 trillion and it will take four years for retailers to overtake pre-pandemic levels, a new Forrester report said on Tuesday.
The impact on India and Japan is to be severe due to the strict lockdowns, the declaration of a state of emergency in Japan, and the postponement of the 2020 Summer Olympics.
The likelihood is that the epidemic will last seven months, and from 2021 retail categories, that have declined by more than 10 per cent, will only bounce back to 90 per cent of pre-pandemic spend.
In the worst-case scenario, lost online sales could reach $510 billion, and even in the best case, retailers will lose $244 billion in online sales, the report mentioned.
"COVID–19 is significantly impacting the global retail landscape. 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," said Michael O'Grady, principal forecast analyst at Forrester.
In 2020, there will be a significant decline in global retail sales, particularly with non-essential items sold offline, which will be a big challenge for brick–and–mortar retailers.
"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," he added.
While offline non-grocery retail will contract by 20 per cent, ecommerce sales will remain flat this year.
In Asia Pacific, the loss of sales is predicted to reach $767 billion in 2020, a decline of 10 per cent from 2019.
China is the most negatively affected country in the region, with $192 billion of retail sales lost in January and February compared to the same period last year.
"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," said the report from the global market research firm.
Online sales will remain flat, and an average of $360 billion in online retail sales will be lost globally in 2020 compared to pre-COVID-19 forecasts.
In 2020, global online retail sales will grow by only 0.6 per cent compared to 2019.
In the US, retail sales will fall by $321 billion in 2020, a decline of 9.1 per cent from 2019.
Retail sales will lose 260 billion euros across EU-5 (the UK, France, Germany, Spain, and Italy) in 2020, a decline of 10.4 per cent from 2019.