Research: 57 retail bosses reveal plans to navigate 2023

With the markets and country in the grips of such turmoil, this report – based on interviews with 57 leaders across 54 retailers – provides a now critical strategic outlook on the year ahead and insight into the conversations happening across UK boardrooms.

Navigating the cost-of-living crisis

In order to combat the gloomy trading environment, the retailers interviewed spoke of emphasising value, whether that manifests itself through low prices or high-quality products, depending on their market positioning. Another key strategy is spreading rising costs among their own businesses, suppliers and the consumer.

“Inflation will have the biggest impact on profitability. We’re seeing record price increases at a level I’ve never seen before – and I’ve been in this industry for 15 to 20 years,” says US Polo Assn president and chief executive J. Michael Prince.  

“We can’t pass all of that along to the consumer. Our supply chain partners will have to take some of it and then, with our licensing partners, we’ll have to take some as well. It will be spread among the different groups.” 

River Island chief executive Will Kernan echoes the point that retailers must take action. “We have wide-ranging plans [to deal with the cost-of-living crisis]. Clearly, we need to support and reinforce our value credentials across our ranges to help our customers at this difficult time.

“We are investing further in what we’re calling ‘foundation lines’, ie: core fashion essentials –  not just maintaining, but investing in prices there.

“We’re also investing in quality and design at the top end of our price architecture. There is significant cost price inflation taking place, some of which we will have to absorb within our P&L, which our suppliers are supporting us with.”

Inflation vs profit potential

The word on every retailer’s lips is inflation. 

How that impacts businesses’ abilities to grow profits and convince shoppers to part with their money is a major factor in how the industry is mapping out its plans for 2023.

The consensus among the retailers interviewed was that balancing increasing costs in the supply chain with a world-class customer proposition has to be central to a 2023 strategy. 

“Profitability is going to be under pressure because we are seeing such high inflation in the cost of goods and we don’t want to pass that on to our consumers”

Tracey Clements, BP

BP chief executive of convenience in Europe Tracey Clements, who also spent more than 16 years at Tesco, underlined the scale of the challenge facing retailers.

“For all good retailers at the moment, profitability is going to be under pressure because we are seeing such high inflation in the cost of goods and we don’t want to pass that on to our consumers,” she explains.

“Wherever possible we’re trying to offset; I’ve never quite seen such a high inflationary climate in my career, both in terms of cost of goods and in terms of things like utilities. Across the board, we are seeing some very high inflationary numbers.”

Leaders keep calm and carry on

Despite the pressures of ongoing digital transformation, Brexit-related disruption, a global pandemic, war in Ukraine, challenges across the supply chain and now the fiercest cost-of-living crisis in generations, managing through chaos has become the norm for retailers, and confidence about growth remains.

Almost half of retailers forecast sales to be slightly higher in 2023, with a further 18% expecting them to be much higher and 10% forecasting them to remain flat, our research shows.

The in-depth interviews also signalled good news for frontline employees – 71% of chief executives, managing directors and founders said they expect to navigate next year with more or the same number of staff in stores. 

Want to find out more about the 2023 strategies of the 57 leaders? This is just the tip of the iceberg.