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New report reveals rising prices driving retail sector growth

02 January
10:37 2013

According to a new report from Verdict and SAS UK, the UK retail sector is set to grow by 1.8% in 2013 with total retail spend hitting £300.7bn – the highest rate of growth since the recession began, although it points out that this growth is largely down to rising prices.

Food, which accounts for 45% of retail spending, remains the main driver behind retail growth at a total growth rate of 3.1%. However, the report says this is mostly due to price inflation, meaning UK shoppers will be spending more to buy essentially the same amount. This is being driven by increases in grain prices and rising fuel costs continuing to put pressure on supply chain and logistics costs.

Verdict Research director of research & analysis Maureen Hinton said: “UK retailing is set for another year of tough trading as the hoped for economic recovery is put back further and austerity continues to reign. Though we are set to see the highest growth since the recession began with some surprise winners such as the DIY and gardening sector and, of course, online, in general, consumers will be paying more in 2013 for the same items and, as a result, retailers will continue to look to international markets such as Europe, India and the USA for real growth opportunities.”

SAS UK & Ireland retail consultant Ruth Jackson said: “Retailers need to consider a myriad of external influencing factors happening in the market when planning their strategies for the year ahead. Shoppers want a consistent customer experience and so retailers must adopt an omnichannel approach to understand their behaviour, and successfully deploy strategies across all channels.

“Interestingly, the findings show that the role of a retailer is evolving with more demand for home delivery and click-and-collect services. Customers now expect retailers to literally go the extra mile to meet their demands, meaning they need to extend supply chain capabilities and re-consider how they run their end-to-end operations.

“Many retailers are using analytical technology to report on historic sales and previous trends. But in this ever changing environment, a more pro-active approach is needed to understand what is likely to happen next. Taking a more forward-looking approach to predict shopping trends and understand the impact of decisions, will help many retailers to weather the storm ahead more effectively.

“It’s vital that they have the solutions in place to understand and predict the increasingly complex and changing nature of customer behaviour, so as to make the best real-time decisions about products, services and how to communicate with their customers.”

Source: Verdict/SAS

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