The UK retail market sets the standard globally due to its focus on competition and innovation that puts the customer in the driving seat.

I believe that today UK retail leads the world. For decades the industry leader was the US but oaver the past few years we have caught up and are now forging ahead.

I believe we have a clear lead in three key areas: competition, innovation and online. Starting with competition, economic barriers to entry are still probably lower in the States but I think the higher costs of establishing and running a retail business in Britain raise the performance bar here. In many of our retail sectors being good is no longer enough. Standards are being pushed ever higher just to stand still.

Since the debt crisis began there has been very little real growth in UK retail spending. As a result, leadership teams have focused on capturing market share for growth. That in turn has underlined the need to show that you are demonstrably better than the guy next door.

Not so many years ago, if you wanted to see leading-edge retail innovation you went to the US. I’m not suggesting it has dried up there completely, but the UK has become so much more dynamic and creative. The internet has much to do with this, challenging thinking about customer engagement across all channels.

“Being good is no longer enough. Standards are being pushed ever higher just to stand still”

Richard Hyman, founder, richardtalksretail.com

Today that engagement has pushed UK online retail sales to 11% market penetration – higher than anywhere on the globe. That is enabling retail to become much more data-rich. Suddenly, retailers are able to communicate with their customers at very little cost. That presents a huge new challenge: what do they say to them?

Another huge online challenge is around margins. Online retail is less profitable than its physical counterpart and as it slice of revenue increases, that margin erosion has to be managed. Meanwhile, the need to get online orders to customers in the most timely, convenient and economic way has spawned a number of variations of click-and-collect, usually involving stores.

Our retail industry has huge opportunities not only to establish overseas versions of UK websites but to export its expertise too. The impact of online on physical retail is something we understand far better than most overseas retail leadership teams because we are a number of years ahead of them. That is increasingly being recognised abroad and our top retail managerial talent is becoming increasingly attractive. The retail brain drain overseas has been gaining ground over the past few years and I am sure it will increase further.

I can’t see any let-up in the pace of development and the intensity of challenges across the industry. Competition will increase further – while store sizes may be shrinking a little, online is more than compensating. So in a period with little or no spending growth, capacity has increased steadily. After years of importing price deflation from lower-cost producers, we now import price inflation.

And then there is the customer. Today’s shopper has more choice than ever before. We have transitioned from a seller’s market to a buyer’s market, and the customer is well and truly in the driving seat. All of this will help ensure UK retail retains prime position on the international retail stage.