Retail industry forecast to grow in 2020

However 2020 will be another year of transition for the industry and improved shopper sentiment “is not a silver bullet for retailers”, according to the KPMG/Ipsos Retail Think Tank (RTT).

As well as the certainty brought by this month’s general election, following years of political dispute over Brexit, confidence is likely to be boosted by an improving housing market.

RTT member James Sawley, head of retail and leisure at HSBC UK, said: “The news of a governing party, with a comfortable majority and clear vision for Brexit, gives me hope that we will see a rebound in consumer confidence in 2020.

“The UK consumer may breathe a sigh of relief. The end of knife-edge votes and uncertainty should translate to a loosening of the purse strings.”

Retail analyst Nick Bubb, also an RTT member, said: “Whether the decisive election result will ultimately deliver the certainty that the UK economy needs is unclear, as the risk of a no-deal Brexit at the end of the transition period remains, but an expansionary Budget in February will boost the consumer and the doubters can at least console themselves with the thought that the prospects for the housing market have improved.”

The RTT noted that a short-term economic boost will would not be enough ”to breathe new life into an industry that is undergoing wider structural changes” and that the new yeaar is likely to bring more adminsitrations and restructuring.

Retailers’ values are anticipated to become ever-more important to commercial success next year. 

KPMG UK head of retail at KPMG Paul Martin maintained: “It is becoming increasingly clear that whilst the three key historic drivers of purchase decisions – value, convenience and experience – remain important, new factors are rapidly emerging. I would argue that a second lens of factors should now be considered, these being choice, purpose and privacy.”

Grocers are likely to come under pressure next year, according to the panel, as the landscape contknues to shift as new businesses such as Deliveroo make inroads into the food market.

Nielsen UK head of retailer and business insight Mike Watkins said: “Shopper behaviour is changing with more of what we consume being purchased away from large supermarkets and instead at small stores, out of home or using food delivery specialists and platform providers.

”There will be consolidation in this channel and possibly investment by other retailers as different business models emerge. And after three years of weak growth there is a need for many supermarkets to reposition in order to be able to achieve a growth in value sales that at least moves in line with CPI, and a recovery from the 1% decline in volumes across the £164bn food retail industry in 2019.”