The UK retail sector was already undergoing fundamental change well before the Pandemic struck, as consumer shopping preferences shifted away from bricks and mortar high street-focused spending to online channels. Online sales had risen over 8 years from £33bn in 2012 to £76bn in 2019, but then surged by 30% in 2020 alone as lockdowns and tier restrictions limited access to physical stores. It now represents over 31% of all retail sales.
The Pandemic has radically changed the retail sector and the footfall in high streets and town centres as the WHF phenomenon has taken hold and shoppers have shied away from previously crowded shopping centres. Major chains and independent retailers have been savaged; an estimate by the Centre for Retail Research showing that around 180,000 jobs were lost in the sector in 2020 and predicting that the figure for 2021 could be worse still.
Government support measures have stopped the carnage being more severe, but at the price of loading retail businesses with huge borrowings and allowing debts to suppliers and landlords build up to alarming levels. Managing the post-Pandemic recovery from this precarious position will be the greatest single challenge the sector has ever faced.
Business challenges faced by the retail sector
- Understanding customer demographics and being relevant for them
- Downsizing and re-sizing store portfolios
- Improving online, multi-channel and physical store experiences for consumers
- Re-shaping staffing profiles to match changed business models
- Improving profitability of online offerings
- Managing the returns phenomenon
- Staying nimble in a rapidly changing retail environment
- Repaying loans taken out during the pandemic
- Negotiating with landlords on rent arrears and future rents
- Managing supply chain disruption from Covid-19 and Brexit
- Restoring staff morale and re-integrating returning furloughed staff
- Repairing balance sheet damage caused by falling property and other asset values
- Making sure the business is both solvent now and viable for the future
- Securing adequate funding, especially for post-Pandemic growth
- Producing meaningful and realistic financial forecasts
Helping businesses in the Retail sector
Market Sector Report
The UK Retail Market – It was already in transition before Covid
Retail has been buffeted for years by change on an historic scale. A simple analysis might point the finger of blame at the rise of internet shopping. In this report, we look at the market and it’s transformation.Download PDF