As the new year approaches, here are my retail predictions for 2013.
As the new year approaches, here are my predictions for 2013.
Overall retail spending will only recover very slowly, at best. Consumer confidence will remain fragile, worries about unemployment will cause many households to save rather than spend, and the housing market will remain subdued.
High street retail will continue its decline, on the way to an eventual 30% reduction in space. But the Government will do nothing serious to change planning, parking or rates.
Consolidation will continue, especially in value sectors, where winners and losers will emerge as financing structures come under stress.
Commercial leases of five years will start to become the norm, as the restrictions of the UK property market are no longer able to hold.
Online shopping will keep growing at 14% per year and will reach 12% of all retail spending. UK internet retailers will continue to extend their offer internationally, tapping into a global etail market that will pass the e1trillion mark. Click-and-collect as a channel will add as much growth as home delivery.
M-commerce (spending through mobile phones and tablets) will continue to grow rapidly but remain niche – it will still not exceed 1% of overall retail sales. Grocery will be most popular, owing to the ease of topping up orders and amending deliveries.
But sales made in store that are influenced by smartphones – for price comparison, checking availability or seeking product information – will grow to about 8% of total retail sales. In value terms this will be the fastest-growing mode of shopping – adding more sales than online ordering for home delivery, or click-and-collect, or m-commerce.
Mobile proximity payments will remain in a phase of experiments and pilots. Widely accepted technology standards and business models have yet to emerge.
Next generation loyalty schemes will be launched: personalised, mobile and social.
International retailers will continue to shuffle assets between them, consolidating strong positions and exiting weak ones.
China will see the first significant failure of a leading local retail group – watch out in the sectors of sports apparel or electrical goods.
India will be viewed with renewed interest from international retailers as restrictions on Foreign Direct Investment are eased. But other obstacles, including logistics, transport, variable quality of property and political corruption will continue to deter all but the bravest.
Local manufacturing will be back. Combined pressures of transport costs, ‘want it now’ consumerism and customisation will encourage retailers to trial onshore sourcing from small, flexible, high-tech plants.
Several major retailers will feel the backlash of customers for failing to adhere to the values they proclaim. The smarter ones will demand that customers participate in their sustainability programmes, earning respect for admitting that they can’t do it alone.
And this time next year, I’ll be looking smug on some fronts and foolish on others. Merry Christmas.
- Michael Jary Partner, OC&C Strategy Consultants