Retail in 2020 | The next decade for the industry
The past decade has been far from rosy for the UK high street. Further to the financial crisis of 2007/8, retail output dropped by just over 4% during quarter 3 of 2008. The situation hasn’t improved much since and the retail sector continues to face ongoing challenges. So what will retail in 2020 really look like?
Nelson Blackley of Nottingham Business School offers an optimistic view for the future of the British high street. Brent Cross Shopping Centre is undergoing a £1.4billion re-development. And Axiom (one of the largest out-of-town UK shopping precincts to be built in the past 20 years) will be installed near Leeds.
According to Price Waterhouse Cooper, around 15 shops on the British high street are shutting down each day. Most severely affected are fashion stores, electrical retailers, charity shops and pubs. One reason for this is the increasing popularity of online giants such as Amazon. Coupled with the rise in discount supermarkets and retailers, this has led to the collapse of many much-loved brands. Some of these include Mothercare, House of Fraser and Toys R Us.
The recently re-elected Conservative party have promised to “extend the retail discount on business rates to 50%” in 2020. That applies to any business with a rateable value below £51,000.
But while this could lead to a generous tax cut for small businesses, the British Retail Consortium remains critical. They say that this discount will not help “to save the UK’s suffering high streets and retailers”. Other research by the BRC revealed that around 30% of retail jobs in Britain could disappear by 2025.
Despite the research by the British Retail Consortium, Euromonitor predicts over 80% of goods will be purchased in-store by 2022. So, while the high street will continue to exist, they’ll likely be significant changes to how it looks.
The Rise of Online Shopping
Technological innovation means many people are now choosing to shop online. And if they do go in-store, many shops have replaced at least some of their cashier staff with self-service tills. Mike Ashley (owner of Sports Direct) is quoted as saying “the internet is killing the high street”.
Internationally, a report by Oxford Economics states there could be 14 million robots working in China by 2030. It’s only a matter of time before the rest of the world follows suit.
The Need for Modernisation
The high street is ever-changing, so what is the best way for retailers to remain competitive? Modernisation. A strong online presence is now the bare minimum. Instead, retailers need to get on board with technology to offer data-driven, robust processes across the business. That includes the support of mobile apps to support online shopping.
Click and collect is a popular option. This allows customers to make their purchases online, whilst ensuring that they will still need to physically visit the store. So, they are still coming to the high street, allowing them to browse and potentially buy further items.
Retailers will also need to make the in-store shopping experience more user-friendly. Many supermarkets have introduced scan-as-you-shop facilities. This allows customers to avoid spending time waiting for the cashier to scan their items through the till.
Checkout free stores like Amazon Go have already started trading in the USA. They’ve also been trademarked in the UK, so they are sure to be coming soon.
Loyalty programmes offer retailers an effective way to gather data about customer browsing behaviours and shopping preferences.
For consumers, shopping online gives more choice, lower prices and swift, convenient service.
This means retailers will need to concentrate on working closely with customers to identify their expectations for the coming years. There is still pleasure to be gained from visiting an out-of-town shopping centre, or browsing high street shop windows. Improving customer experience will be key to ensuring that this remains the case in the coming years.
When it comes to large purchases, customers still value the opportunity to try before they buy. As a result, there is likely to be a shift towards ‘showroom-style’ retail shops. This will allow customers to try several different options before making a decision.
There are plenty of reasons to remain hopeful that the retail shopping scene won’t disappear completely. The secret to success will be reducing the gap between online and high street shopping and improving customer experience.
Arrange a free consultation with our team of experienced and approachable tax incentive advisors today. At Kene Partners, our mission is to help innovative companies access millions of pounds of government money set aside to foster innovation. Your business could be next.