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The outlook for retail: Q4 and beyond
In the wake of a series of high-street store closures, the ongoing Brexit negotiations and a highly saturated market, how can retailers attract and retain, top industry talent to stay ahead of the curve during a period of uncertainty? What is working and what do retailers need to be doing to evolve with the retail sector?
These are some of the key challenges that were discussed during our Page Executive Retail Leaders Breakfast event on 25th September 2018. We highlighted key hiring trends and were joined by Maureen Hinton, Retail Research Director for GlobalData plc for interesting insight on the current issues in the market and her forecast for 2019 trading based on GlobalData’s unique market research on the UK retail market.
Growth in the UK retail sector
Insight from GlobalData has revealed that although many believe that the biggest hindrance of growth in the UK retail sector is the shift online, this is actually not the case. While online channels give consumers more choice, the main thing is that there is overcapacity in the market. There is much more competition than there is demand, which is restricting growth. When combined with the ever-changing marketplace there are a number of challenges at play.
Global competition – Not only is the UK market highly competitive but consumers now have unlimited access to products from around the globe.
Demographics - Consumers are changing. Millennials are more considered about the products that they are buying, opting for entertainment and travel experiences over objects. Baby boomers have also shifted their spending to such activities.
Geopolitics – Uncertainty surrounding Brexit, trade wars and the introduction of tariffs are all potential changes that will impact supply chains.
Consumer attitudes – The way consumers buy is very different. Mobile devices now allow consumers to buy anywhere, at any time, and their expectations of services are growing.
Technology – New technology has had a huge impact on retail as this has shaped the way consumers spend today.
Challenges and opportunities in the UK market
Redistribution of spend
The highly competitive retail market has seen a number of casualties in the home, electrical, toy, and discount sectors. However, as Maureen highlighted during her presentation, the combined consumer spend of just a few of these retailers, equates to approximately £1.37bn. This is spend that will now be redistributed back to competitors and is driving the market.
Looking forward over the next six months, it has been predicted that the UK economy is likely to worsen. Personal finances will worsen and retail spending will be strongly negative. Personal savings are expected to increase during this time. This means that there will be an increased need for retailers to manage costs if the top line is not expanding. The personalisation of product and delivery will also be key.
Growth in the food and grocery, health and beauty, and electricals sectors is expected to slow down in 2019 while the clothing and footwear, DIY and gardening, and homewares sectors are forecast to produce a slight increase. Following a decrease in expenditure this year, the books, news and stationery sector, furniture and floor coverings, and entertainment sectors are expected to return to growth – albeit for the majority it will only be around 1.5%.
Looking forward: the UK retail sector
If we consider the future of retail in the UK, Maureen highlighted that the retail sector is experiencing continuous evolution and retailers need to have a unique selling point to survive. Physical retail must be relevant and it might also serve businesses to seek new markets outside the UK, in order to grow.
Following our Retail Leaders Breakfast event, we spoke to Maureen for further insight into the future of retail. On the topic of the high streets’ evolution, Maureen had this to say:
“I think the high street is going to be different in that it’s going to be focused much more on being a social space. I’m talking more about local high streets. You’ll have coffee shops but you’ll also have libraries that are community centres, there will be meeting places for people, there will be entertainment and leisure. It is going to be much more about communities and social rather than selling products. Selling products will be something that is peripheral.”
The retail customer experience and personalisation are two other key considerations for retailers looking forward. As the focus on social aspects of high streets grows, the overall experience of retail will become increasingly important. “It can be as simple as what it has always been - investing in your store staff to deliver the service.” Maureen highlighted.
“There is a lot of evidence that if you train your store staff and get them really engaged, they can really help sales. However, the customer experience is about the whole piece - at every touch point. There is a lot of talk about personalisation. Can you personalise your offer to what a specific person wants?”
Understanding your customer and delivering relevant products, at the right time, at the right price, and via the right channels is essential. “It is a case of having an appropriate or relevant experience that will drive customer loyalty,” Maureen explained.
Talented retail executives drive success during times of change and in the face of challenging market conditions. It is their influence, from the top down that pushes a strong and motivated team forward.
If you are looking to hire at the executive level, get in touch with your local Page Executive office for a confidential discussion.
Partner, Page Executive
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