Retail is currently undergoing an evolution and the nature of evolution means that some companies will survive, while others won’t. We can expect far more casualties in 2019 and the decline of big companies and household names collapsing under the weight of lengthy leases and stock that can’t be shifted.
UK shopping habits have changed and the number of online shoppers has grown year on year, meaning less footfall in stores. CEOs and directors across the sector are having to make knife-edge decisions quickly as cash reserves continue to dwindle. Clothing specialists such as ASOS, Bonmarche, and Primark were particularly badly hit in November as consumers held off Christmas purchases in the light of ongoing Brexit negotiations and economic uncertainty. December sales figures were up slightly, but the outlook going into 2019 is bleak.
One retailer attempting to bridge the gap between online and physical stores is the high street giant Next. Offering customers the option to buy from their website and then collect in selected stores was partially successful. Next ensured they weren’t hit as hard as competitors who failed to embrace the digital revolution. The continued polarisation of physical and online retail is becoming ever more evident and retailers who fail to adapt to this emerging market will fail.
There may be a wider issue at play here: a rising philosophical rejection of consumerism. For those retailers offering experiences rather than things, Christmas 2018 was an excellent time. Virgin, offering experience days, had their best ever trading period across the festive holidays and experienced double-digit growth. They’re expecting to see more growth across 2019. While consumers seem less inclined to buy things, sales of food and drink experiences, attractions and adventure packages such as helicopter flights and skydiving were up.
Some consumers are getting greener and more ethical in their purchases. Toy swap shops are popping up all over the UK, more people than ever are rejecting what retailers are offering in favour of homemade gifts and experiences. These are trends that CEOs and retail directors must take into account if they want to survive. Whether they have enough wiggle room in their leases to survive another year as bad as 2018 is yet to be seen. The future looks bleak for any retailer failing to take evasive action from the political storm that is online purchasing, political uncertainty and the current tendency of families to pick experiences over products.