Shares selects the potential winners as shoppers prepare to spend their lockdown savings

According to the Government’s latest ‘roadmap’, non-essential stores in England can reopen from 12 April. This includes clothes shops, book shops, department stores (remember those?), mobile phone shops, betting shops, car dealerships and shops such as florists and hairdressers.

Face masks and social distancing will still be necessary, but for a good proportion of the population the chance to get out of the house and get back to something which resembles normality can’t come too soon. The question for retailers is, will spending habits get back to normal?

As Mark Brumby of Langton Capital puts it: ‘There has been a debate as to whether consumers are a “coiled spring” waiting to spend, or whether much of the money ‘saved’ during the pandemic hasn’t gone into the pockets of the middle and upper middle classes, where it might be saved or spent on a holiday  in Tuscany.’

It’s hard to know to what extent we will embrace being able to go shopping for non-essentials again. Will there be the ‘coiled spring’ effect, or could the prospect of jostling along crowded pavements and through packed shopping malls put us off, at least to start with?

Despite all the advantages of shopping online, one major drawback is, no matter how good the picture, you can’t actually see what a product looks like up close nor can you feel it in your hands.


As long as there is added utility in actually going to the shops, then those shops should be ok. Primark, part of Associated British Foods (ABF), doesn’t sell online at all, so its stores – which have been closed for most of the last year – are likely to be rammed with shoppers desperate to stock up on cheap clothes the minute they open.

High-street institution Marks & Spencer (MKS) has been open for food but closed for clothing and homewares, so the escalators are likely to be busy as soon as the top floor opens in most towns and cities.

The demise of Debenhams and Top Shop this year means less choice for shoppers so for the survivors this is the opportunity to pick up market share.

Arts, crafts and book-seller The Works (WRKS) should be another beneficiary of the reopening thanks to the appeal of its stores and its prices, which are significantly lower than high street rival WH Smith (SMWH).


We suspect that firms like Currys PC World, part of Dixons Carphone (DC.), which has operated without a hitch during the pandemic, probably won’t see a big increase in footfall as most of us are now fairly comfortable ordering tech and toasters online.

B&M European Value (BME) is another big lockdown winner, having been physically open throughout which meant its footfall increased dramatically. We wonder whether post-lockdown it is likely to be a ‘must-go’ venue for most shoppers.

In contrast, DFS (DFS), which has enjoyed a surge in online sales, should benefit from the reopening as many people still like to ‘try before they buy’ when it comes to big-ticket items like furniture.

Similarly, homewares and furnishings firm Dunelm (DNLM) is likely to see its in-store sales jump as customers take the opportunity to get out and actually handle the products they’ve so far only been able to covet online.


Conventional wisdom is that firms which had to close their stores will have lost customers. In fact, according to a survey by Columbus and Retail Gazette, 70% of firms said they had increased their customer base last year with 40% saying they had ‘a broader demographic of people shopping with them’.

The trick now is to retain those new customers who came on board via e-commerce, so loyalty programmes are likely to be big in 2021. Also, direct communication with shoppers – used to great effect by the supermarkets during the pandemic – is seen as a tool for converting customer goodwill into pounds and pennies. Retailers are, in addition, likely to direct more of their marketing to social media.

Next and Marks & Spencer

Sector stalwarts Next (NXT) and Marks & Spencer will be relieved to see non-essential retail reopen, with both likely to prove beneficiaries of high street capacity withdrawal.

Hard-pressed Marks & Spencer should benefit as mature, vaccinated shoppers return to its brick and mortar outlets to browse for clothing and homewares. Bossed by chief executive Steve Rowe and chairman Archie Norman, Marks & Spencer is materially into a major change programme that includes reducing retail selling space. Interestingly, it also replicating rival Next by forging clothing partnerships with third party brands to turbocharge growth through its online platform.

Lord Wolfson-led Next has indeed lost brick and mortar sales due to Covid restrictions, though the UK’s number one online clothing retailer cushioned the blow of the lockdowns by leveraging its best-in-class digital operations and continues to extend its online platform to host smaller brands.

In its most recent move, Next acquired a 25% stake in affordable luxury clothing brand Reiss, with an option to increase its interest to 51%, in a deal that will see Reiss go live on Next’s ‘Total Platform’ in February 2022. The intention is Next’s online systems, warehouses, distribution assets and sourcing base will serve as a launch pad for Reiss’s UK and overseas growth plans.

One fervent fan is William Meadon, manager of investment trust JPMorgan Claverhouse (JCH), who regards Next as an example of a company which ‘continues to stand apart from its competitors. Its online offering is “best in class” in terms of efficiency and customer interface and, in our opinion, its management team is without peer.’

Meadon continues: ‘Incredibly, even in this most brutal of retail storms, Next has continued to generate cash and been one of the few high street retailers to maintain its rent obligations. The goodwill this must have generated with their landlords will surely be rewarded once the high street reopens. All in all, Next looks well placed to benefit from consumers starting to spend some of their lockdown savings.’

Shares’ Reopening Picks

Associated British Foods (ABF) £24.19

Lockdowns in the UK and Europe led to lost sales of £1.1 billion in the first half to 27 February 2021 for discount clothing chain Primark, the jewel in the crown of foods-to-fashion conglomerate Associated British Foods and prime beneficiary of the reopening of non-essential stores.

Consumers have been quick to return to Primark shops as lockdown measures are lifted and we’re fans of its unique business model centred on a flexible, low-cost supply chain and the continuous release of new products.

The Works (WRKS) 41p

There’s a definite niche for The Works, the cut-price books, arts and crafts and toys retailer which can reopen physical stores from next month.

This well-managed retailer’s brick and mortar stores performed well when they were allowed to open during the pandemic. Like-for-like sales actually increased by 10.6% over the 19 weeks to 25 October when stores were open, ahead of management’s expectations and demonstrating the relevance and appeal of products which enjoyed strong online growth during lockdowns.

Dunelm (DNLM) £13.26

Bedding, curtains and kitchenware retailer Dunelm proved a clear lockdown winner as consumers invested in home projects, with strong online sales helping to offset the impact of store closures. Once non-essential stores reopen, the homewares leader is well-placed to profit from a release in pent-up consumer demand.

A cash-generative retailer with a tight focus on stock and cost control, Dunelm has resumed dividend payments and its combination of high-quality stores and improved digital capabilities leave it well placed to take market share.

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