Brexit uncertainty has topped the list of British consumer concerns heading into 2019, according to a new Natwest and Retail Economics report.
The report, which surveyed a sample of 2,000 consumers in december 2018, shows that almost half (48 percent) of respondents say Brexit is their biggest concern in 2019, followed by ‘a weaker economy’ (13 percent) and ‘lack of savings’ (12 percent). Just under half (41 percent) of consumers expect their personal finances to weaken this year.
“It is perhaps unsurprising that Brexit has been declared the top customer concern,” David Scott, head of retail and leisure at NatWest, said in a statement. “Uncertainty always has and always will damage the sector. 2018 was a year of unprecedented change in the retail industry, and this change propels uncertainty - there is nothing more uncertain than what Brexit will look like.”
Brexit is biggest concern for UK consumers
The ever-evolving digitally-led shopping environment is also having a big impact on retailer behaviour, according to the report, leading to overcapacity of the UK market, with non-food online spending forecast to reach 50 percent in the next 10 years, leading to overcapacity of retail space of around 20 percent.
“The rapid evolution of consumer preferences will leave many retailers struggling to adapt business models swiftly enough to meet heightened expectations throughout 2019,” Richard Lim, chief executive at Retail Economics said. “The priority will be to focus on strategic transformation to pivot business models so they don’t get left behind in a digitally driven age.”
Retailers struggling to keep up
The report warns that further administrations and CVAs should be expected in 2019 as retailers struggle to adapt their businesses to rapidly changing customer behaviours and expectations.
Lim continued: “The ongoing channel shift to online presents a particular challenge to bricks and mortar business models as the performance of physical assets become increasingly polarised. In many cases, retailers are burdened with too many stores, unsuitable space and inflexible lease structures.”
This report comes a week after new figures from the British Retail Consortium (BRC) revealed that some 70,000 jobs were lost in the UK retail sector in the final months of 2018, with the number of employees working in retail down 2.2 percent in the final quarter of last year, compared to the same period in 2017.”
Lim added: “I expect the industry to remain locked in a period of disruption throughout 2019. Structural challenges facing retailers will continue to accelerate and those that embrace, adapt and innovate to the emerging environment will be the ones to benefit.”
Photo credit: Pixabay, chafleks