The challenges that have plagued the UK retail sector this year will ”intensify” over the course of 2019, a report from the KPMG/Ipsos Retail Think Tank (RTT) has warned.
Factors including changing consumer behaviour, the over-supply of bricks-and-mortar stores, high levels of legacy debt, regulatory costs, economic and political challenges, and a lack of talent at the top of retail businesses to help deliver change, were all flagged as key issues within the sector.
The RTT stressed that 2019 would be a challenging year regardless of the impact of any potential Brexit developments.
Paul Martin, UK head of retail at KPMG and a member of the RTT, added that Brexit was not to blame for retail’s wider struggles: “It is too easy to point the finger at Brexit as the singular cause of all the woes in the industry. There is in fact a much wider array of forces at play currently. These forces have been gathering momentum for a number of years and are by no means new.”
“Controlling the controllable” was the advice for retailers bracing for the uncertainties in the year ahead, although the report also suggested that many retailers are already too late to put in place contingency plans in the case of a no-deal Brexit.
The heavy discounting of non-food items could lessen in 2019, said Mike Watkins, head of retailer and business insight at Nielsen UK, noting that retailers have reached the point where they cannot discount any deeper: “Those who are left have to protect their margins and they may accept fewer sales at a higher price. In some cases, no sale is better than a bad sale.”
While online continues to dominate, the report predicted a potential swing back towards bricks-and-mortar stores in the coming year, as shoppers seek out a more tangible experience, and awareness grows around the true cost of home delivery.
Dr Tim Denison, director of retail intelligence at Ispos Retail Performance, suggested that fashion retailers could continue to see the value of investing in store teams via training programmes, as employees play an important role in converting browsers into buyers.
As part of this, click-and-collect was judged an “untapped opportunity” for retailers and should be better integrated into in-store experience.