2023 was frequently a tough year for retail. From the ongoing cost-of-living crisis to the travail of the pureplays and the collapse – and rebirth – of a much beloved high street institution, here are the stories that shook the industry

Surging retail crime 

While a growing problem for retailers since the dark days of the pandemic, 2023 was the year that crime – and shoplifting in particular – began to dominate headlines.  

Shoplifting

The rise in retail crime dominated headlines throughout 2023

In October, the British Retail Consortium (BRC) put the scale of retail theft at £953m, even though retailers shelled out more than £700m this year on crime prevention. This took the total cost of retail crime to £1.76bn for the year to April 2023.  

The issue seemed to peak, not coincidentally, alongside soaring inflation rates in spring and early summer.  

In July, c-store specialist the Co-op reported “record levels” of crime in its stores: a 35% increase in incidents year on year in the first half, equating to nearly 1,000 every day.  

Most concerning for retailers was the sense that this crime spree was not being driven by struggling consumers but often perpetrated by organised gangs.  

John Lewis Partnership chair Dame Sharon White summed the problem up when she said such gangs felt they had a “licence to shoplift” because of police inaction.  

All of retail will be hoping that the closer ties proposed by police operation Project Pegasus will offer some respite from this problem in 2024. 

Cost-of-living crisis 

Directly linked to the spike in crime has been the continuing cost-of-living crisis, driven by factors such as Russia’s ongoing invasion of Ukraine. 

Inflation reached historic levels in 2023, peaking at 19.2% in March – the highest annual rate seen for more than 45 years.  

Food price inflation also reached its highest rate at the historic level of 15.7% in April, while fresh food inflation hit 17.8% during the period.  

Consistently high inflation throughout much of the year has accelerated value-conscious shopping habits for consumers.

Aldi and Lidl enjoyed bumper sales years and both predict “record” Christmas trading periods. Sales and footfall also leaped at other value retailers as cash-conscious customers traded down over the year.  

Non-discount retailers by comparison have leant heavily on loyalty schemes to slash prices and keep customers happy. This worked so well for some that it led Sainsbury’s chief executive Simon Roberts to declare that “the heyday of German discounters is over”.

The cost-of-living crisis also profoundly changed the pay landscape for retail employees. Frontline pay has risen further as retailers across the board bumped up wages to reflect inflation.  

Wilko collapse  

After struggling on and off for years, Wilko collapsed into administration on August 10 with the loss of 12,000 jobs. 

While the retailer’s demise was mourned by customers nostalgic for its cheap pick and mix, that was just the beginning of the story. Having failed to find a late buyer or investor to save the business, a feeding frenzy ensued over what was left.  

Wilko Kingston

The demise of Wilko was one of the biggest retail stories of the year

Value competitors Poundland and B&M ended up carving out some of Wilko’s stores, while The Range swooped in to acquire its ecommerce website and has since reopened a handful of stores under the Wilko name.  

However, while Wilko will continue in some capacity, the fallout from its collapse has continued to make headlines – particularly the behaviour of the Wilkinson family and former chair Lisa Wilkinson.  

Wilkinson and Mark Jackson, chief executive at the time of Wilko’s collapse, along with auditors from EY, were dragged before the Business and Trade Committee and grilled by MPs in November.  

In the end, Wilkinson said the business ran out of cash, a warning to all retailers that cash continues to be king in 2024. 

Stores renaissance 

Shops have bounced back post-Covid and that trend has only accelerated this year.

In some cases, this was driven by the cost-of-living crisis with bricks-and-mortar discounters seeing footfall grow, while omnichannel retailers enjoyed a bounce as customers came back to shopping as a leisure pursuit.  

Marks & Spencer this year embarked on its biggest-ever store opening spree, while John Lewis executive director Naomi Simcock said customers are “really coming out” on Fridays and Saturdays.  

While overall footfall numbers are still hovering below pre-pandemic levels, soaring prices sent consumers flocking back to stores at the expense of ecommerce.

As a result, many new and established brands have returned to physical formats, opening new stores this year after a hiatus during the pandemic period.  

While the much-awaited new Ikea store on Oxford Street has been delayed until next year, household names such as HMV have returned to the famous shopping destination in recent weeks.  

Pureplay giants Shein and Asos both opened their first-ever physical stores – albeit pop-ups – in the West End, while both Bond Street and Covent Garden played host to several high-profile new openings in 2023.  

Pureplay struggles  

However, one victim of this return to stores has been pureplay retailers.

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Shein’s UK business posted sales surpassing £1bn 

Once darlings of the industry, retailers such as Asos and Boohoo have gone from bad to worse this year as both struggled with declining sales and profits. 

While growing demand for physical stores played a part in the decline of these two one-time giants, an arguably bigger issue has been the emergence of Chinese-based value competitors that have undercut them on price – namely Shein and Temu.  

While Shein has been criticised as the “epitome of mindless consumption” by some observers and its success flies in the face of the view that younger consumers have a growing sense of social responsibility, its relentless focus on price has seen its market share in the UK soar this year – passing £1bn in sales.  

While Temu only launched in the UK in April, it is already building momentum and experts say it could be another future threat

Artificial intelligence 

2023 will also be remembered as the year that artificial intelligence (AI) exploded into the public consciousness.

While tools such as ChatGPT and Midjourney captured the public imagination, the practical applications of AI for retail businesses also reached a tipping point.  

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AI tools such as ChatGPT captured the public imagination in 2023

While retailers such as Amazon and Very have been implementing AI into their operations for years, 2023 also saw smaller retailers begin to harness the power of this emerging technology.  

For example, in July, cosmetics brand Iconic London trialled an AI-powered negotiator bot called Nibble on its ecommerce site, allowing consumers to negotiate prices for items in their baskets.  

2023 was just the beginning for AI’s implementation into retail, and adoption will no doubt continue at a rapid pace in 2024.  

Troubles at John Lewis 

A number of retailers struggled this year, but few captured the headlines quite like John Lewis.  

While rival Marks & Spencer has gone from strength to strength, John Lewis endured another tough year of trading. However, it’s not just the numbers that drew attention to the department store chain in 2023.  

In March, it emerged that JLP chair White might consider the sale of a stake in the business after 73 years operating as a staff-owned enterprise in a bid to raise £2bn in new investment.  

White was quick to play down the story and said John Lewis would always be owned by staff, but admitted that “the partnership needed to evolve and change shape” in the future if it was to survive.   

The retailer also pushed back the delivery of its transformation plan and in October it was revealed that White will not seek another term when her current one ends in 2025.  

Major acquisitions 

Several retailers changed hands this year as groups such as Frasers and Next snapped up additions to their empires.  

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The Body Shop was bought by Aurelius in October following a long sale process

Frasers finished adding a brace of former JD Sports brands to its portfolio – including Tessuti, Scotts and Choice – in February.  

However, it left one of its biggest deals until late in the year, acquiring luxury fashion specialist Matches the week before Christmas.  

Next completed a deal for Made.com in February and Cath Kidston in March, took its stake in Reiss to 72% in September and agreed a £115.2m takeover deal of Fat Face in October 

In grocery, Asda owners Zuber and Mohsin Issa sold their petrol forecourt empire EG Group UK to their grocery business in a bid to supercharge their expansion plans into convenience retailing. 

One of the longer-running private equity sales of the year was The Body Shop. The retailer attracted interest from a raft of private equity firms after it was put up for sale by Natura & Co. 

German investment firm Aurelius eventually won the race for the health and beauty retailer, striking a deal in October.  

All change at the top 

Many retailers saw a change in leadership during 2023.

Some of the most high-profile new appointments in retail took place in grocery. Morrisons hired former Carrefour executive Rami Baitiéh as the replacement for long-term boss David Potts, who stepped down in October. 

The same month, Jason Tarry, another long-term retail servant, announced he would be departing Tesco after more than 33 years. He was replaced as UK and Republic of Ireland boss by former Lidl UK boss Matthew Barnes.  

John Lewis also made sweeping changes. In March, the department store retailer appointed former Hovis, Burger King and Pepsi executive Nish Kankiwala as the first chief executive the company has had in its 160-plus year history. 

In February, executive director Pippa Wicks announced she would be stepping down after less than three years in her role, while chair White announced in October that she would leave in 2025.  

In March, former Co-op food boss Jo Whitfield took the reins at value fashion retailer Matalan, while David Boynton stood down from his role as chief executive of The Body Shop in the spring.  

Ocado Solutions boss Luke Jensen stepped away from the technology business in July, while former Asda and current JD Sports chair Andy Higginson joined the BRC as chair in September.