Report Finds UK Retail Market Among Toughest in the World

Print Friendly, PDF & Email

UK retail

Retail’s demise is moving beyond the U.S., as price wars, changing consumer demands and a digital landscape continue to take a toll on the U.K. retail market.

According to Euler Hermes study, “Global Retail Disruption: Pressure and Potential in the Digital Age,” U.K. retailers are facing the most pressure to digitize their traditional business models in comparison to the other 11 markets in the study (U.S., Brazil, China, France, Germany, India, Italy, Japan, Russia, South Korea and Spain) thanks to things like Brexit, e-commerce competition and lower consumer spending.

Even though U.K. nominal retail sales increased by 3 percent since last year, low inflation (+0.7% in 2016) and severe price pressures have contributed to price wars among the nation’s retailers. These prices wars have bled many retailers—in the U.K. and around the world—dry of their financial resources, and that coupled with a failure to adequately adopt supply chain digitization meant profitability declined globally from 8 percent in 2011 to 5.7% in 2016. As a result, bankruptcies soared globally by 66 percent last year.

Consumers just aren’t willing to spend much more on products. According to a recent First Insight study, 90 percent of consumers expect discounts on the products they purchase. This mindset has prompted many retailers to risk their margins and discount items more in an attempt to secure more purchases.

“Retail is at a pivotal moment. Many traditional retailers face the urgent need to rethink their entire business model,” said Maxime Lemerle, Euler Hermes group head of sector and insolvency research. “The stark choice facing many retailers in the years ahead, however, is quite simply adapt or close.”

In the U.K. in particular, the retail scene remains unpredictable since consumers there are shopping less and e-commerce continues to have more appeal than brick-and-mortar stores. Lemerle identified three main challenges that retailers will face over the next five years. Global retailers—especially those in the U.K., he said—will struggle with providing a seamless omnichannel experience, maintaining an online presence without price wars and facilitating better mobile experiences.

Despite the U.K.’s challenges, however, the study said the country has the most potential to achieve complete digitization in the future. Currently, the most prominent issue U.K. retailers face is creating a mobile customer journey, followed by lacking funds to build an online presence, and mastering omnichannel. But these retailers could bridge the gap between in-store and online channels by leveraging IT and installing advanced payment methods.


Recent News

Business Analysts’ Top 10 Economic Predictions for 2018 Show Positive Signs

The global economy will expand in 2018, matching the rate of growth achieved in 2017 and marking the first time since 2011 that global growth topped 3 percent, according to an annual forecast by business information provider IHS Markit.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Shuffle Board: Macy’s Loses Executive Chairman, Nike Ramps Up Digital & Retail Team

Terry Lundgren, Macy’s executive chairman, is retiring from the company’s board, plus Nike added two new executives to elevate its digital and retail teams.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more

Report: Only 8% of Retailers Are Maximizing Ominichannel’s Promise

Omnichannel is more than just a buzzword—it's a necessary strategy for survival but too many retailers are struggling amid the current retail turmoil to keep up with consumer demands for a seamless experience.

This content is for Annual, Monthly and Limited members only. You can read up to five free articles each month with a Limited Level Subscription. Please log in, or register.
Log In Register
Read more