The UK retail industry will “flatline at best” in 2018, according to predictions from KPMG and Ipsos Retail Think Tank (RTT).
Members of both organisations attributed this to an increased number of regulatory compliance issues and ongoing structural change within the industry, as RTT members predicted that consumer spending will be low as incomes are squeezed and inflation rises.
They also forecast that the divide between food and non-food retail will become more pronounced as non-food sales will be dented by consumers’ need to spend more on inflated food prices.
The businesses highlighted a “critical need to re-evaluate business models and strategies used to gain market share” as the industry faces “continued headwinds”.
Paul Martin, UK head of retail at KPMG, said that “winning market share will remain a core focus for businesses” in light of consolidation and partnerships made between retailers in 2017.
He added: “The UK retail sector continues to undergo fundamental structural change.
“With online now reaching close to 20% penetration (28% in non-food) of all retail transactions, the store-based business model (in its extent today) is threatened.”