The UK retail industry faces yet another “tough year” with UK retail spend expected to grow by only 1.2% in 2012, according to a new report from Verdict Research and business analytics company SAS.
Food and grocery sales are the key drivers behind this growth (3.3% growth) as consumers spend more time at home in a bid to cut costs. Spending outside the food sector is expected to shrink by an additional 0.5%, meaning it has decreased by £9.5bn since 2008.
Retail expenditure has hit a low since the start of the recession in 2008, highlighting the increased pressure on both the retail industry and consumers. Expected growth in 2012 is the third lowest rate in the last 40 years, following only the growth seen in 2011 (0.9%) and 2009 (-0.4%). This demonstrates a significant change in attitude from extravagant to austere, says Verdict.
Maureen Hinton, practice lead at Verdict, said: “The first three months of 2012 will be the most difficult period for retailers as consumers cut back severely after the expensive Christmas period. Conditions will ease slightly with events such as Easter, the Diamond Jubilee and the Olympics improving consumer sentiment, but overall confidence will still be low.
“Real improvement and growth are only likely from October onwards when, as long as the weather is seasonably cold, consumer will be driven to buy seasonal essentials before the end of the winter retail season in December and get back into the Christmas spirit.”
Alex Fovargue, retail specialist at SAS retail practice UK & Ireland, said: “As consumers continue to cut back on their spending, the pressure on retailers intensifies so it is now even more important to look at strategies to maximise sales and maintain margins.
“Monitoring customer behaviour is critical as the information that retailers have about their customers from till receipts, credit and loyalty cards and even social networks can steer understanding of purchase patterns and consumer needs. Convenience and online shopping will be particular growth areas for grocery with this new stay-at-home mentality for example. Using this insight to drive marketing and business development should be at the heart of retail business strategy.”
Source: Verdict Research/SAS
