Retailers face ‘quality not quantity’ future

THE retail landscape has changed forever, and in the future businesses will have a smaller number of high quality shops supported by a website, an expert panel said.

Regional polarisation is another danger, with the economy in London and the South East powering ahead, while those in the UK regions suffer from the effects of the cuts to the public sector.

The event organised by accountants and business advisers BDO heard from the turnaround investors Hilco, which has revived the ailing Habitat furniture chain, and from sector expert Tim Danaher, editor of Retail Week.

Asked about the future trends in the sector, Mr Danaher said: “Retailers are going to need fewer better shops – they are not going to need 200 stores any more. It’ll be more like 30 really good stores in prime locations backed up with a website.

“For example if you look at Yorkshire, you’d want as a retailer to be in Leeds, but you’d not worry about Bradford or Wakefield. I think this present a challenge for secondary locations which is a social and political one as much a s retail one.”

He said if rents come down, smaller provinical towns  could see a revival in smaller, independent chains. He said too there were signs that even the most recent phenomena in this market sector, pound shops, had reached saturation point.

Successful retailers meanwhile will continue to invest in online, and mobile commerce, while targeting international markets for growth, he predicted.

BDO partner and business recovery expert Dermot Power, who hosted the event at Harvey Nichols in Manchester, said the retail sector had proved to be resilient during the recession.

Low interest rates, which boosted the spending power of those in work, and low levels of unemployment over the last two years, had protected retailers from the worst of the recession he said.

Such benign economic conditions were coming to an end, with inflation, rising unemployment, VAT going up and possible interest rate rises on the horizon.

“I do think we will do back to the two-level type economy we saw in the 1980s and 1990s, with London and the South East powering on, but on the flip side there will be significant numbers of flat and difficult spots in the regions.”

Despite the market conditions tightening, Mr Power said he expects there to be a “consumer slowdown not a meltdown” this year.