The ‘very limited’ re-opening of clothing and homewares retailer Next’s (NXT) online operations (14 Apr) shows businesses’ emergence from the coronavirus-enforced shutdown is likely to be a gradual process.

Next’s phased reintroduction of its online operations shows that the recovery will happen in slow motion.

Companies across all industries will need to focus on safer ways of working and confidence among shoppers will take time to return, especially if infections persist. Across Europe, some countries have allowed partial returns to work, but others have extended their lockdowns, the UK among them.

GRADUAL RE-OPENING

Having shuttered its physical stores, Next closed its online business in late March after staff at its warehousing and distribution operations expressed concern that they were still being made to work. The retailer has since re-opened online (14 Apr) but in a very limited way and only after implementing extensive additional safety measures.

Chief executive Simon Wolfson said the idea was to ‘begin selling in low volumes, so that we only need a small number of colleagues in each warehouse at any one time, helping to ensure rigorous social distancing is complied with’.

Encouragingly for Next, appetite for its offering remains strong. The business hit its self-imposed daily order limit before 8.30am on re-opening and closed the site until the following day.

SALES SUBDUED

Shore Capital points out that rival clothing retailers have continued to trade their online operations despite shuttering physical shops as part of the government lockdown, including John Lewis and Marks & Spencer (MKS), while shoppers have been able to purchase online from the likes of Amazon and online pure-plays ASOS (ASC:AIM), Boohoo (BOO:AIM) and Sosandar (SOS:AIM).

Yet the broker’s view is that online order quantities will have been somewhat subdued given the restrictions on going out/cancelled holidays across Europe. ‘It remains to be seen what real appetite there is for online clothing currently given the “stay at home” message and travel restrictions,’ says Shore Capital.

Peel Hunt argues Next will gradually build volumes, capacity and ranges for sale over time, while maintaining a clear focus on safe working practices.

‘We believe the business has a role to play in helping to clear excess third-party stock across its platform, accelerating recovery as we come out of lockdown.’

It adds that the firm will ‘come out of this in a stronger market position’.

This pattern could well be repeated across other sectors with the more robust businesses able to weather the storm and pick up share from those which do not survive.

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