Consumer confidence shaky as Brexit bites
Brexit uncertainty is the biggest concern for consumers in 2019, with many expecting their personal finances to weaken in the year ahead, according to research conducted by NatWest and Retail Economics and involving 2,000 people.
Its report also highlights how technology-driven changes in consumer shopping behaviour have fundamentally changed the way consumers and retailers use property, leading to over capacity of physical space in the UK market. Forecasts predict non-food online spending to reach 50% in the next 10 years, leading to overcapacity of retail space of around 20%. Further administrations and CVAs should be expected as retailers struggle to pivot business models quickly enough to meet the realities of today’s digitally-led retail environment.
“It is perhaps unsurprising that Brexit has been declared the top customer concern. Uncertainty always has and always will damage the sector. 2018 was a year of unprecedented change in the retail industry, and this change propels uncertainty – there is nothing more uncertain than what Brexit will look like,” says David Scott, Head of Retail and Leisure, NatWest.
“Consumer confidence remains shaky at present; though we think the outlook for consumer spending will improve as inflation falls towards our target of 2%. In fact, by the final quarter of this year – we expect real wage growth to be up by 1.3%. This presents the retail industry with an opportunity to attract and in many cases, re-attract custom.”
To achieve this, retailers will need to evolve more quickly than ever before, he adds. The traditional metrics – sales per square foot etc. – will need to be redrawn for the new digital age, and the new ways in which customers interact with brands, including brand buzz and product dwell time.
“The fact is that in 2018, those brands that had joined up strategies in alignment with the customer journey enjoyed success, so we predict more will follow this model in the year ahead. While we recognise the struggles the sector is facing, we still see opportunity and we are very much active in helping businesses both large and small navigate this tricky time,” Scott concludes.