Retailers are at a crossroad this year as 2016 heralds a last hurrah for consumer spending and disruptive forces continue to accelerate and impact on organisations globally, according to Ernst & Young.
Furthermore, a ‘margin vice’ of deflation, discounting, and the upcoming new national living wage, continues to bite with over 50% of retail investors in a recent survey carried out by the firm.
Julie Carlyle, head of retail at EY UK & Ireland, said: “We’ve just come through the second Christmas in a row with virtually no growth at all in the UK retail market. The growth we did see came from a particularly strong online performance driven by Black Friday, while sales from physical stores went backwards. Discounting was prevalent across the board so there is no doubt that retailers’ profit margins will have been squeezed.’’
In order to survive and prosper, retailers must move quickly, innovate and evolve. However, according to research by EY only 70% of today’s major global corporations will attempt to reinvent themselves digitally – with 40% of these failing, and only one-third of them surviving the next 25 years.
Helen Merriott, EY UK & Ireland Advisory, lead retail partner, said: “Leading retailers who will ride out the storm and win market share in the coming years need to act fast, be bold and embrace new propositions which engage the ever evolving customer in our digital world.
“Customers are demanding price competitive and convenient shopping either for frequent top ups or weekly shops – ‘discountvenience’. In clothing the off price and value retailers are mostly thriving and are driving products customer want with freshness and great value – interestingly not always online. Winning retailers will blur the physical and digital world and create a customer experience that is the same at every touch point with the brand.”