The retail industry is likely to see growth of at least 1% in 2020, according to new data.
The growth is expected to be buoyed by post-election political certainty which will “kick start spending” according to the latest report from the KPMG/Ipsos Retail Think Tank.
James Sawley, head of retail & leisure at HSBC UK, said: “The news of a governing party, with a comfortable majority and clear vision for Brexit, gives me hope that we will see a rebound in consumer confidence in 2020. The UK consumer may breathe a sigh of relief, the end of knife-edge votes and uncertainty should translate to a loosening of the purse strings.”
The report predicts that “inefficient and irrelevant legacy retailers will continue to struggle in 2020”, with the number of re-structures and administrations set to rise on 2019.
The Retail Think Tank found that cost savings will continue to be a common theme for 2020 with many continuing to look to their property portfolios to unlock a suggested further 3 - 5% over the next 12 months.
Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs, noted: “Of the retailers that don’t restructure via CVA or some other mechanism, a large majority are going back to landlords and asking for rent reductions. The recent closure of property funds is the first sign that property funds are materially starting to feel the pain that retailers have been feeling for years – and there may well be more fund closures or outright business failures before 2020 is out.”
Retail Think Tank members also agreed that a retailer’s values will play an increasingly prominent role in driving sales next year, ”with consumers becoming more aware of the impact that their lifestyles have on the environment”.
“It is becoming increasingly clear that whilst the three key historic drivers of purchase decisions – value, convenience and experience – remain important, new factors are rapidly emerging, ” said Paul Martin, UK Head of Retail at KPMG. ”I would argue that a second lens of factors should now be considered, these being choice, purpose and privacy.”
Consumers are predicted to continue to turn away from volume purchasing and instead consider at businesses supply chains, delivery methods and packing when shopping.