Daily Management Review

Low Wages, Online Retail And Change In Consumer Spending Habit Spelling Doom For U.K. Retailers


02/19/2018




Low Wages, Online Retail And Change In Consumer Spending Habit Spelling Doom For U.K. Retailers
When the latest data about the retail industry in the U.K. was released by the Office for National Statistics, City economist Jeremy Cook City economist Jeremy Cook commented: “Who’d be a retailer now?”
 
“The average Brit,” he added, “has spent the past few years living by the mantra ‘When the going gets tough, the tough go shopping.’”
 
Cook said that a long term and continuous slowdown is being faced by the retail sector as customers were not as hardy as they once were. This can be read into from the latest data available, he added.
 
The chances of higher borrowing costs, very high levels of consumer debt and real wage decline have hit U.K. shoppers. However, there has been a structural shift in the manner in which consumers are now spending money and this is the larger problem.  This problem is apparently a big threat to the retailers as well as threatening to alter the look of the U.K. high streets in the future years. It also raises questions about what would be the fate of retail parks and malls after retailers shut their shops.
 
The fact that about 20 per cent of all fashion sales in the U.K. – which is the industry sector that is facing the most pressure, have shifted to the internet, is not the only problem. The manner in which consumers are now spending their money has undergone a seismic shift. Consumers are now spending their money as well as time on eating out, eating in, social media, leisure, travel and technology. That money and time used to be directed earlier towards shopping.
 
Consumers now prefer to buy local food and buy them more often than earlier. This means that consumers are staying away from weekly shopping sprees in out-of-town superstores, which has pressurized the stores. The big supermarkets are now attempting to attract other retailers to occupy the space that they do not need now. 
 
This shift in the shopping habit of consumers means that physical retail space in British towns and cities are becoming useless while boosting the revenues for online market places like Amazon, Asos and Boohoo.
 
In the last few months, the impact of this change in shopping habits has been observed in the collapse of a number of physical store chains including fashion store East and shoe chain Shoon as well Warren Evans and Feather & Black – both bed specialists. And reeling very close to being bankrupt is Toys R Us while the likes of House of Fraser, Debenhams and New Look are struggling to make ends meet. The last three are contemplating closure of store space on the large scale.
 
“You need to understand your market, be creative and use lateral thinking,” says Peter Cooper, director of UK shopping centres for Hammerson. “There is an easy way that might involve spending lots of money, and a hard way that involves thinking on your feet.”
  
reckons at least 20% of retail space will need to close over coming years as costs, including business rates and wages, rise while sales in physical stores continue to fall. “This is a slow burn,” he says. “Retailers have done all sorts of things to paper over the cracks, but what the markets need is for retail to get smaller”, says independent retail analyst Richard Hyman.
 
(Source:www.theguardian.com)






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