Today Jon Copestake is speaking at the Retail Week Technology Summit 2012 about the outlook for retail. Here are his thoughts.

Austerity and uncertainty over Europe means that the UK is unlikely to see annual volume growth of more than 1% over the next five years, compared to double digit growth in China. Value growth will be higher, but this will be undermined by inflation, especially given food and oil price rises.

In the UK the main underlying trend is that consumers are adopting increasingly complex shopping patterns to get what they want.

The last few market share figures released by Kantar have hinted at a polarisation in shopping habits where consumers use discounters like Aldi or Lidl for groceries but also splash out in more expensive shops like Waitrose. This is squeezing mid-market retailer ssuch as Morrisons and Tesco, especially as the underlying trend towards convenience stores also pushes consumers away from the big box formats that defined retail over the last decade.

Whether consumers still express a desire for discount channels as incomes recover remains to be seen, but there is no doubt that out of town stores will see their importance decline as digital channels and convenience store channels exploit the price and time sensitivity of savvy British consumers.

One thing that is also certain is that the high street is unlikely to look the same again. While we can point to the poor economic environment, the problem is also structural and the downturn can only be seen as a catalyst.

UK retail growth v China

Many high street specialists are either being undercut by cheaper online rivals or selling increasingly obsolete products.

In the first half of 2012 retail failures have already eclipsed the whole year for 2011

Having said that the “death of the high street” is an exaggeration. More businesses will certainly close, but evolving retail strategies simply mean that the role of the high street will change rather than becoming redundant.  Starting with “click and collect” we are seeing a more unified offering by retailers that will continue to drive footfall to stores, even if the related sales are conducted via digital channels.

Leading the world in ecommerce

When it comes to embracing new technologies UK consumers have proven themselves to be world leaders in terms of retail channels.

2012 online share

The UK already has the highest proportion of online sales in the world, which is expected to be 13.2% this year. It is also seeing annual double digit growth, a figure that is likely to be sustained over the next five years, especially as mcommerce gains potential.

UK retailers are also seeing strong growth abroad by adopting online strategies to tap into foreign markets with Asos setting the benchmark for cross border growth.

Online and bricks and mortar are becoming more closely aligned – and stores are increasingly offering experiences to bring in customers. Tesco and Asda have already announced plans for multimedia displays and the potential for technology to enhance instore experiences is strong.

  • Jon Copestake, chief retail analyst at the Economist Intelligence Unit