Posted by Guy Grainger
Head of Retail UK
Jones Lang LaSalle
Another year over and one that drew to a close with the retail industry facing a dampening of sentiment on the consumer side (austerity measures, job security, the VAT rise etc…), and adverse weather disrupting the all important Christmas trading period.
You’ll know by now that many retailers prospered and it was encouraging not to see widespread discounting until the final week before Christmas. A drop in retail sales in December of -0.3% year on year was not unexpected given the heavy snow and certainly much better than some of the doom mongers were predicting.
For retailers though, concerns are not about Christmas 2010 but the impact of austerity measures and inflation on performance in 2011. So, what’s in store? Here are some things to watch….
- It hardly needs to be said, but keep an eye on inflation. Along with job security, a jump in interest rates will have the greatest negative impact on consumer sentiment and expenditure this year.
- As belts tighten, consumers will seek value for money, good service or real convenience. Retailers will have to be on their game to generate growth in profits.
- Year on year growth has been up across the board for the large food retailers. These retail giants will be responsible for the most expansion in 2011 and they could also be the catalyst for some major town centre regeneration.
- By 2020 online sales could comprise up to 20% of total expenditure. Those retailers with a truly multi-channel business and unique product will benefit at the expense of multi-branded retailers.
- Several sectors will see consolidation either due to market influences or opportunities for retailers to drive economies to scale. We anticipate this most in electrical, home and value sectors.
So, we’re set to see some changes as the market continues to bed down and react to some of the challenges emerging from a variety of angles. There is no doubt though that the best will continue to evolve, continue to surprise and for many it will be a year of great opportunity!