Retail set for new boom after bust
New research, commissioned by ecommerce partner Webloyalty, into the future of retail has predicted solid growth in UK retail spending over the next five years. The country’s recovery from recession should be consolidated with total spending expected to rise by 14.4% in the period, from £310.5bn in 2012 to £366.6bn by 2018.
The report, compiled by research specialists Conlumino, details expected change in a number of areas, including GDP, retail spend, and more specialist measurements such as consumer sentiment. Retail spend will outstrip growth in GDP, which is expected to have climbed 13.9% by 2018. Consumer sentiment is predicted to be far more positive by 2018, increasing from a base of -29.3 today to 7.9.
The report, looking at the future of retail from a supply perspective, is the second part of Webloyalty’s research. Part I, published earlier in the year, looked at retail from a demand perspective and revealed the recession had cost the economy more than £23bn in lost sales between 2007 and 2012.
This second part of the research plots three forecasts, a ‘realistic’ path, as well as more optimistic and pessimistic scenarios. In many ways, the recovery will be ‘jobless’ with unemployment remaining stubbornly high – between 5.1% and 7.6% in 2018, from a base of 7.9% today. The most optimistic scenario would see a further £10bn in retail spending: £376.8bn by 2018.
Three sectors are tipped to see a particularly large expansion in spend, with food, health & beauty and clothes & fashion all expected to see growth in spending of 15% or more. In part this increase is expected to reflect persistently high inflation in the food sector. In contrast, home entertainment spending will continue to collapse – with spending expected to fall by a further 25.2%.
Commenting on the findings, Guy Chiswick, Managing Director of Webloyalty UK, said: “Knowing that the UK economy will continue down the road to recovery will reassure retailers. However, our research shows the real boom times will not be back anytime soon. The frivolous, carefree consumerism of the past is gone and retailers need to do more to really inspire customers and actively sell to them.”
Neil Saunders of Conlumino added: “The key for retailers in the coming years will be to make people want things that they don’t necessarily need. This needs very different selling skills to those used in the past. Retailers need to do more to understand consumers and engage with their values.”