Rapid changes are under way across the spectrum of different asset classes, and investors will need to adapt their approach.

Investors are working hard to assess what recent pandemic-driven changes will mean for different asset classes. In the retail sector, the crisis has accelerated structural changes already under way, increasing online retail spending at the expense of the high street. European consumers have been slower than their counterparts in the UK, US and China in embracing online shopping, but during the three months to the end of May 2020, online sales grew 20.6% year-on-year.

Some European countries are now at a tipping point that will result in an acceleration of online sales penetration. Retailers are therefore expected increasingly to focus investment on their online offering. As an example, Inditex recently announced its intention to achieve 25% of total sales from online (up from 14% in 2019). It also plans to close 1,000-2,000 stores over the next two years. As part of this strategy, it is investing in stores that are “fully integrated, digital and eco-efficient”, and closing smaller stores reaching the end of their life cycle.

Supermarkets have been thriving, both online and offline, and have added significant capacity to meet demand. Sales have rocketed as a result of stockpiling and more meals being eaten at home. Across Europe, supermarkets and larger stores saw faster revenue growth than the discounters because shoppers opted for fewer, larger shopping trips. Online food shopping is relatively underdeveloped in Europe but has seen strong growth recently. To meet demand, a number of retailers have opted for a click-and-collect model based on existing store networks rather than trying to fulfil demand from fledgling warehouse networks.