Retail at risk of 'meltdown' over next decade

Rising costs and slowing spending could plunge the retail sector into crisis

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The retail sector could plunge into crisis over the next 10 years as costs explode and consumer demand slows according to a report by Verdict Consulting.

Verdict Consulting's report identifies 10 potential risks to the retail sector and says that rising costs and falling demand could result in bankruptcies and job losses as retailers adapt to cope.

The report said that cost of running a retail business could explode over the next 10 years as tighter environmental regulations, rises in the price of oil and more expensive supply chain costs combine to create a protracted inflationary backdrop, Verdict said.

Verdict estimates that retail cost inflation is running at around 4% in 2008; but says that over the next 10 years this could rise to 9% or more. In addition Verdict expects retail spending growth to slow from an average annual growth rate of 6% in the 1990's to 2.6% in the 2010's.

Verdict senior consultant James Flower said: "As far as retail is concerned, we are at a turning point in environmental matters. The likelihood is that the government will get more coercive over the next few years and will place a greater onus on retailers to protect the environment. Like it or not, this will inevitably make it more expensive to do business."