The leading think tank for the retail industry, KPMG/Ipsos, has outlined a big warning for the UK’s retail industry this year and has urged retailers to prepare for a fight for survival. A report, published on Thursday 28th December, indicates that a mixture of economic and political challenges could profoundly impact businesses within the sector over the next year, along with regulatory compliance issues and structural adaptions.
Trickier trading conditions could also dent the sector, causing huge obstacles for those who are not prepared for the foreseeable future. Paul Martin, the UK head of retail for KPMG, noted that “winning market share will remain a core focus for businesses.”
Martin also highlighted that brick-and-mortar business models could be in for a tough year ahead, as online shopping continues to dominate how consumers spend their disposable income, something which has become tighter due to the high rise in inflation rates that will not be levelled by substantial wage increases.
The fight for survival had already made headlines in the later stages of last year, with one example being the UK arm of Toys ‘R’ Us struggling to make ends meet. Although their online store continued to thrive, the brick-and-mortar outlets saw monumental declines in their sales.
Brexit will continue to plague businesses, with the think tank highlighting a “close correlation between the outcome of Brexit negotiations and the overall health of the industry”. The predictions indicate problems for either result of the deal talks, with a soft Brexit likely leading to poor growth for the sector and a hard Brexit seeing contractions in the marketplace.
Despite negative predictions for the year ahead, official retail figures were healthy for November 2017, with increases recorded for annual sales in both volume and value for the UK retail sector.
Looking towards an unclear future in retail, many experts are advising retailers to review their strategies for 2018 to react to the changes in the economic landscape. The most strategic move any retailer can make is to conduct a thorough review of their business expenditure to ensure their business is operating at its best performance. A sentiment echoed by a partner at KPMG, Jonny Marston:
“As the first port of call, retailers should be looking at how they can manage their costs… By undertaking a robust and critical review of their business sooner, rather than later, retailers can avoid being left behind.”
If you’re a retailer looking for the advice of procurement companies, get in touch with our specialists today. Whilst we cannot change or prevent the outcomes of the Brexit deal on the industry, our experts can help you ensure your business is in the best possible shape to deal with the cost repercussions of our current environment. Through our comprehensive analysis and solutions across a multitude of areas of business operations, with each department boasting successful results for a range of businesses, you can feel confident in the fact that your retail business will greatly benefit from the process, particularly in the year of uncertainty that lies ahead.