The high street is bracing itself for a “wave of consolidation” and an upsurge in digital investment, retail veteran Lord Stuart Rose has said.
Speaking on a panel at the London launch of the 2018 World Retail Congress, Rose said businesses are struggling with too much retail space and will need to devise radical solutions for this.
He said: “If you have too much capacity and your costs are going up and your margins are going down, what do you do? There’s no price elasticity.
“If you are Tesco or Sainsbury’s and you reduce the price of cocoa by 10% you’re not going to sell 10% more, or if you do, you will be nicking it from somebody else, so there’s absolutely nowhere for the industry to go.”
Rose, who chairs lifestyle retailer FatFace and is a former M&S chairman, said the industry was on the verge of a revolution driven by technology, changing shopping habits and Brexit.
Rose said pressure on store bosses has intensified as Brexit looms. He said the impending departure from the EU is a “serious problem” for the industry after the weak pound pushed up the cost of goods and squeezed wages.
As a result, he said retailers are facing a bleak Christmas, adding: “It’s going to be tough in the UK. People are going to be very thoughtful about what they spend their money on.
“If you are a retailer sitting on a lot of stock at the moment I would start worrying.”
Rose added that the pace of change is reaching “fever pitch”: “What you are going to see in the next five years is nothing like what we’ve seen over the last five years.
“In the old days we bought stuff, we stuck it on the counter and basically told customers that is the price, take it or leave it. It doesn’t work like that anymore.
“Today customers want what they want, when they want and it’s not what we want to charge, it’s the price they are prepared to pay.”