Retail
Retailers are having to cope with a marked deterioration in consumers’ willingness to spend compared to 2010. The rise in VAT, reduced availability of credit, falls in the value of property and the numbers of house moves, as well as rises in the cost of living, are impacting on consumer confidence.
According to Verdict (UK Retail Futures 2012), retail expenditure will actually rise by 16.3% over the next five years, 0.8 points faster than in 2002-07. However, the main driver of this growth will be higher inflation, and when this is stripped from the growth rate, the underlying increase at constant prices is 14.4%, much slower than over the previous five years. Of the £45.7bn increase over the forecast period, £29.8bn will be spent online and only £16.7bn via tills in-store.
Inflation will continue to increase price pressures; most acutely in food due to significant rises in farm gate prices and the higher cost of energy. Increased mineral prices and output constraints in China will limit the scope for continuing deflation in non-food categories.
As a consequence of all these changes retailers should review their existing strategies carefully and plan for ever greater levels of efficiency. As always there will be winners and losers. Steps that you might like to consider include:
- Targeting investment rather than spreading it too thinly. Consider which sectors offer the most potential and ensure you understand exactly where you profits are being made.
- Benchmark your performance against competitors by obtaining up-to-date market intelligence reports and prepare realistic forecasts for the productivity of your store portfolio.
- If you have not already done so you should evaluate the potential for adding e-retail to your offering. However you need to be clear about how quickly your online sales will grow and how will this will affect sales through your stores.
- Review your marketing to drive greater footfall and increase transaction sizes.
Secantor can help you in many ways including:
- Providing a business expert to work alongside you to help review your options and decide on a refined strategy.
- Help you create a Dynamic Finance Function to drive entrepreneurial thinking by ensuring that you have frequent, timely, and accurate management information along with a full analysis of implications and opportunities.
- Helping you source appropriate funding when required.
- Helping you with specific projects such as diversification, acquisitions, expansion or, where necessary, down-sizing.
- Helping you analyse performance and improvements in functions such as marketing, IT, HR, health and safety or intellectual property.
