Retail based sector trends

(last updated July 2019)

The retail sector as a whole has seen the following developments:

  • the increasing dominance of the large national chains. This has occurred in many different sectors and threatens the smaller independent
  • the expansion into new sectors by the major supermarkets - this also threatens the smaller specialist independent retailer
  • customers demanding good value for money
  • pressure on prices as a result of competition and price-conscious consumers - one of the legacies of the recent economic downturn has been a growing trend for people to shop around (including online) for the best prices and this has benefited discounters like Aldi and Lidl
  • major retailers holding longer and more regular sales periods
  • the high standards being set by the major retailers influencing the standards found in the independent
  • the continued growth of online retailing (around 16% of total retail sales in 2017, rising to 18% in 2018), with growth of online retailing by stores with a physical presence overtaking that of non-store retailing
  • as predicted, there has been rapid growth in contactless payments, including m-commerce (shopping using a mobile phone or similar handheld device) and Visa and Mastercard now require retailers to adopt contactless when installing new readers. All retailers will have to have contactless terminals by 2020
  • opening hours becoming longer - although the proposal to extend Sunday opening hours was dropped from the Enterprise Act 2016
  • increased regulation in some sectors
  • a general move to out-of-town retail parks within certain retail sectors
  • the emergence of ethical and environmentally minded consumers who are concerned about the effect their purchases have on the environment
  • the introduction in Wales in 2011, Northern Ireland from 2013 and Scotland from 2014 of a mandatory charge of at least 5 pence for all single use carrier bags. A similar charge was introduced in England in 2015, but small and medium-sized businesses (with fewer than 250 full-time equivalent employees) are exempt

The financial crash in 2008 hit retailers hard, with many relying on discounting as a way of boosting sales. This brought its own problems as consumers put off making purchases to see if prices would be further reduced. The economy started to recover in 2013 and the recovery continued throughout 2014 and into the first half of 2015 before slowing in the second half and into 2016. The vote in June 2016 to leave the EU added further uncertainty to the economic outlook. Economic growth slowed in 2017 as a result of a reduction in consumer spending caused by a squeeze on household spending power due to higher inflation and little growth in wages. Growth was subdued during 2018 with inflation and economic uncertainty putting further pressure on consumer spending. The areas where consumer spending has held up have not benefited the High Street as people have preferred to spend on experiences and leisure activities. They are particularly reluctant to commit to expenditure on big-ticket items. Little change is forecast for 2019.

Retailers face high business rates, increased costs due to the National Living Wage and Apprenticeship Levy, the rising cost of imports as the value of the pound dropped immediately after the vote to leave the EU and the possibility of higher tariffs in the future, and changing consumer preferences for what, where and how they buy.

Although there is still a demand for well run independent businesses in most - if not all - sectors, particularly if they offer 'niche' goods or services, they face keen competition. In many sectors they are also faced with the considerable cost of complying with extensive legislation. It's worth noting that women's wear shops have been closing while online sales have been growing. On the other hand, cafes, takeaways, grocers and convenience stores have been opening. The growth of charity shops has slowed.

You will have to decide whether:

  • demand will be high enough in your area to support your proposed business. If you plan to locate in a rural area, there simply may not be enough customers unless you are confident you can attract them from further afield
  • your local economy is healthy enough to support your business - if your area has been unlucky enough to suffer from many business failures and factory closures, your potential customer base is likely to have restricted levels of disposable income. If your local high streets have suffered from a number of closures and there are lots of vacant premises, this is likely to have had a negative impact on shopper numbers - many have simply migrated to out-of-town shopping parks along with the major retail chains
  • you will be able to compete against any other similar businesses in your area

Keeping up to date with developments

Joining a trade association is an excellent way of staying up to date with developments in your trade. The retail industry is well represented by different trade associations, many of which produce specialist journals containing material of interest to all those operating in that sector.

The Federation of Small Businesses (FSB) represents the interests of all small enterprises in the UK and offers a variety of member benefits. It produces a journal First Voice which helps business people to keep up with issues that affect them.

The British Retail Consortium (BRC) is the leading trade association for the retail industry in the UK. It represents retailers of all sizes that sell a wide range of different products. It also publishes The Retailer magazine six times a year.

The British Independent Retailers Association (BIRA) represents the interests of retail businesses in the non-food sector.

The Institute of Grocery Distribution (IGD) produces many publications of interest to those operating in the grocery sector.

You can visit their websites for more information about the services they offer. Alternatively, you may want to search the Trade Association Forum website for an association that's dedicated to businesses in your particular sector.

Trade shows

You'll be able to get a lot of useful information if you go to a trade show or exhibition for your type of business. You will be able to meet manufacturers, suppliers and importers and plan your future stock buying. The Exhibitions UK website includes details of forthcoming trade events in many different market sectors.

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