Brexit to dent UK retail spend, store over-capacity a problem says new retail report

Those are the conclusions of a new report from NatWest and Retail Economics. Their new 2019 Retail Outlook Report shows just how gloomy consumers are with 41% expecting their personal finances to weaken in the year ahead. But the report’s authors still think the situation isn’t entirely bleak and David Scott, NatWest’s Head of Retail and Leisure, believes that by the end of the year, real wage growth will be up by 1.3% and that the sector “has a real opportunity to succeed.”

As mentioned, Brexit is the key worry, ranking number one on lists of consumer concerns with 48% citing it, well ahead of issues such as ‘a weaker economy’ (13%) and ‘lack of savings’ (12%).And with that 41% expecting to be in a worse situation financially, it’s no surprise that 35% of the 2,000 people surveyed will be spending less this year. Only 17% will spend more.There are particular worries in the least affluent households with 29% worried about repaying credit card debt that may have funded their spending in 2018. And even among affluent households, 14% are worried about debt repayment.ONLINE SHIFT MEANS TOO MANY STORESThe report also highlights how technology-driven changes in consumer shopping behaviour have fundamentally changed the retail picture, with over-capacity of physical space in the UK market a key issue. Forecasts predict that the non-food online spending of which fashion is such a huge part will reach 50% in the next 10 years, leading to overcapacity of retail space of around 20%.The report’s authors expect further administration filings and CVAs “as retailers struggle to pivot business models quickly enough to meet the realities of today’s digitally-led retail environment.”And meeting those realities means retailers need to get their heads around the sharing economy (that is, the rental and secondary markets that are having a big effect on the fashion sector); demand for mass personalisation at scale that brands such as Adidas with its Speedfactory or Gap with its denim customisation bars are already addressing; the popularity of retail subscriptions such as auto-replenishment or smart reordering; and the services economy with consumers expecting retailers to “do it for me”.Richard Lim, Chief Executive, Retail Economics, said: “I fail to recall a more challenging time to accurately predict an industry’s future. Unprecedented uncertainty persists around the Brexit deal, the political landscape and the magnitude of its potential disruption to the UK economy.“The rapid evolution of consumer preferences will leave many retailers struggling to adapt business models swiftly enough to meet heightened expectations throughout 2019. The priority will be to focus on strategic transformation to pivot business models so they don’t get left behind in a digitally driven age. “The ongoing channel shift to online presents a particular challenge to bricks and mortar business models as the performance of physical assets become increasingly polarised. In many cases, retailers are burdened with too many stores, unsuitable space and inflexible lease structures.”NatWest’s David Scott added: “Retailers will need to evolve more quickly than ever before. The traditional metrics – sales per square foot etc – will need to be redrawn for the new digital age [in favour of] the new ways in which customers interact with brands, including brand buzz and product dwell timeคำพูดจาก สล็อตเว็บตรง. The fact is that in 2018, those brands that had joined up strategies in alignment with the customer journey enjoyed success, so we predict more will follow this model in the year ahead.”

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