‘A promising picture for physical retail’

Andrew Goodacre, CEO of the British Independent Retailers Association (Bira), believes independent stores have a bright future as more consumers turn their backs on the internet in favour of better service in-store

As we peer into the horizon of 2024, the prevailing cost-of-living crisis continues to cast a long shadow over the retail landscape. While there is hope for a decline in inflation, higher interest rates are poised to persist, chipping away at consumer confidence. 

The statistics paint a stark picture – a mere 10% increase in the prices of essentials translates to a staggering 72% reduction in disposable income. This squeeze is nothing short of a lifeblood drain for non-food independent retailers.

The coming 12 to 18 months are likely to witness a dampening of spending, given the challenging business climate. The signs of this strain are already apparent, as evidenced by the recent struggles of Wilko. 

While various factors contributed to Wilko’s difficulties, their inability to adapt swiftly enough was a pivotal issue. In contrast, smaller retailers possess an inherent agility that allows them to pivot swiftly in response to evolving customer needs. 

Recent figures from the British Retail Con­­sor­­­­tium (BRC) and KPMG underline the impact of the cost-of-living crisis, particularly on non-food businesses. Declining sales and a substantial drop in volumes reflect the immense challenges faced by these retailers. The expenditure in non-food sectors is heavily reliant on disposable income, and we are now witnessing the tangible consequences of measures taken by the Government and the Bank of England to control inflation. Non-food businesses are indispensable components of the high street. They not only need support to navigate these challenges, but also require assurances that costs such as rates, energy, and labour will remain stable.

Resurgence

Amid these trials, it is heartening to observe some encouraging developments. Independent retailers have seen a resurgence in high-street footfall, a reduction in online sales penetration, and the emergence of hybrid working patterns. High streets have even managed to outperform retail parks and shopping centres. Remote working, once seen as a pandemic-induced trend, has now solidified its presence, actively favouring localism. Remarkably, the share of e-commerce in total retail sales has consistently decreased since the onset of Covid pandemic, stabilising at around 27%. This enduring preference for human interaction and the tactile experience of products paints a promising picture for physical retail.

These green shoots of recovery present abundant opportunities for proactive retailers. It is imperative for retailers to wholeheartedly embrace technology to facilitate seamless omni-channel retailing. In an era where customers increasingly conduct online research before visiting physical stores, technology acts as the bridge connecting the digital and physical worlds. Leveraging customer data allows for personalisation, creating a sense of uniqueness for each shopper. Social media serves as a powerful tool to engage with the community.

The concept of experiential retail breathes life into products, making the act of shopping memorable and enjoyable. Accessibility is also paramount, catering to individuals of all ages and abilities. This might necessitate special hours or services. To excel in this evolving landscape, retailers must invest in staff training, ensuring that exceptional service remains at the forefront. Instead of fearing change, it must be em­­braced as a catalyst for growth and innovation. 

While some of these transitions may require time to fully integrate, the Government must offer support to retailers during this transitional period. The burden of inflexible business rates persists, with looming hikes scheduled for April. 

The recent revaluation has already led to a 10% increase in rates for smaller properties, rendering them less adaptable to these turbulent times. To ensure the survival of these businesses, measures such as freezing the multiplier and making the 75% retail discount a permanent fixture are of utmost importance.

The next year-and-a-half will present formidable challenges for retailers. However, by capitalising on emerging opportunities through technology, unique in-store experiences, top-notch service, and fostering a sense of community, independent retailers can not only weather the storm but thrive. It’s crucial to remember that retail thrives on the human touch.