UK retail fell in 2019, retailers must up their game this year says BDO

The average annual drop may have only been 0.6%, but it was the fifth consecutive dip and that means it’s “of serious concern to retailers,” BDO said. Particularly worrying is the fact that “operating costs are continuing to increase while, simultaneously, consumers are restricting what they spend and channelling growing proportions of their income into services and experiences rather than traditional retail”. The result is even more notable when considering the 140,000 jobs lost in retail and total store closures hitting 16,073 over the course of the last year. 

BDO said some categories did worse than others last year with ‘lifestyle’ seeing 11 consecutive months of negative in-store sales results, only December providing respite due to a buoyant Black Friday kicking off a period of sustained discounting. December’s positive in-store sales result was the first for lifestyle since January 2018.And fashion “remained volatile throughout the year, with six months of negative in-store like-for-like sales results. The sector ended the year with a dive of 2.4% year-on-year.But of course, as in-store sales fell, online sales grew and average annual non-store LFL sales were up by 16.8%, “levelling off in 2019 compared to long-run averages”. Despite that levelling off, non-store sales “skyrocketed” over the course of several key promotional dates throughout the year. In December, they rose as much as 24.5% for their best monthly result since December 2013.2020 PREDICTIONSSo what is BDO expecting for this year? For a start, 17,000 shops have already been predicted to close in 2020. Sophie Michael, Head of Retail and Wholesale at BDO, said “retailers will need to urgently adapt to the changing consumer landscape. They must embrace opportunities to differentiate and adopt measures that will encourage footfall and spending”.She added that “deal-focused retailers, online flash sales, subscription models and loyalty schemes are becoming more prominent as shoppers increasingly demand discounting and convenience. In a sector full of hungry expanding players, such as the discounters and innovative tech-based start-ups, more established retailers can’t afford to ignore these demands and new models”.She also feels retailers need to chase the ‘grey pound’ this year as almost 80% of the growth in the UK population over the next decade will come from those aged 65+. “This demographic is forecast to become the highest-spending age bracket, predicted to account for 30% of retail spending by 2028,” she said.Michael is also urging retailers to “meet modern shoppers’ higher expectations for digital integration”. She said December’s online sales surge was a reflection of consumers looking for “cashless convenience and quick transactions. Technology is creating smarter, connected shoppers but at the same time it is providing solutions on how to meet these demands in a cost-effective manner”.The means wearable tech, smart payments, voice recognition, 3D printing, AI, virtual reality and advanced robotics “are just some of the technologies retailers need to keep abreast of and invest in over the coming years to remain competitive”.She also believes that growing revenues will call for “more diverse strategies with subscription options, micro-payments, rental services and trading/recycling choices to customers” that are “set to become increasingly mainstream”.And of course, we can’t ignore sustainability and ethics. Michael said committing to sustainability will “help brands connect with shoppers in 2020 as the public increasingly holds retailers accountable to their own values before parting with their cash”.Some 55% of shoppers now say they avoid excessively packaged grocery products most or all of the time, and 44% say they’d be likely to purchase vegan health and beauty products driven by concerns around animal welfare and the environment.Getting it right in this area could “attract younger shoppers and build brand loyalty and lifetime value”.

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