The current retail downturn is not simply a temporary side-effect of the recession but the mid-point of a lengthy reform of the retail market, according to retail analyst Verdict Research, part of the Datamonitor Group. Verdict predicts just 8.1% growth in the UK over the five years to 2013, a considerable drop from the 14.1% increase in the same period to 2008. “The good news is that survivors will find themselves in a far less competitive environment, with major opportunities for market share gains and winning new customers,” says Verdict.
Rocketing unemployment is pinpointed as the main driver of the decline. “Both actual unemployment and the looming threat of it act as the ultimate dampeners to consumer spending, so the worst is truly yet to come,” says Malcolm Pinkerton, senior retail analyst at Verdict Research and author of Verdict Research’s Retail Futures 2013 report.
“At present it seems we are still facing a considerable wait before the bank’s balance sheets are sufficiently stable for them to resume a high degree of lending again,” he continues. “Even when the UK economy does lurch back into life, the prospect of higher taxes to repair the battered public finances will inhibit growth severely.” Verdict is predicting a return to positive GDP growth in 2011 but says non-food growth in 2011 in the UK will be just 1.1%.