British shoppers will not let the twin spectres of higher taxes and reduced government spending scare them into giving up their lifestyles in 2011.
Having survived the ‘phoney war’ of 2010 thanks to low interest rates and constrained levels of unemployment, UK consumers are unwilling to curb their current lifestyle by spending less in 2011.
The predictions are set out in a report - BDO Retail Forecasts 2011… uncertain direction - from BDO’s retail and wholesale team and describes the UK consumer as a “curious beast” that pays little heed to “an almost daily barrage of frightening headlines” when it is comes to feeding its “addiction to shopping”.
Throughout the year, BDO’s monthly High Street Sales Tracker (HSST) has been charting a rise of consumer spending that has flown in the face of gloomy headlines. Though retailers believe sales will be steady rather than spectacular during this year’s Christmas trading period, BDO forecasts an overall sales growth of 3% and is convinced there will be no fall in sales next year.
The prediction is backed up by the figures from BDO’s October HSST. Consumers even refused to be unnerved by the government’s Comprehensive Spending Review, recording an overall annual growth rate of 4.1% at medium-sized retailers.
However, while they’ll still spend, consumers are becoming more considered, choosier, and better researched. Retailers will have to work harder to keep tills ticking over by offering an all round customer experience – and that includes the ability to shop when and wherever consumers want. The growth in online retail shown throughout the year by the HSST will continue as firms ramp up their online offering to capitalise on an expanding broadband network.
BDO’s other predictions for the retail sector in 2011 include at least one “megadeal”. A high street brand such as Argos could be snapped up as investors confidence grows and larger outfits look to consolidate. The firm also predicts an increase in overseas expansion by UK retailers.
BDO’s head of retail Don Williams said: “The UK has one of the most competitive retail markets in the world, and that makes UK retailers very good at what they do. We are a nation of shopkeepers catering for a generation of shoppers. They may not have had a great deal of success overseas in the past, but as the world gets smaller and brands get more global, UK retailers are ideally placed to start exporting their skills. Companies are coming out of this recession with healthier balance sheets than they did after the last one and are in prime position to invest – be it in M&A activity, new channels or new regions."
Source: The Retail Bulletin, 12th December 2010.