Retail will hit crisis over next decade, says Verdict

A number of emerging risks could plunge UK retailing into crisis over the next 10 years, according to new research from Verdict Consulting, which says that retailers must be proactive in managing these risks if they are to survive.

Retail will hit crisis over next decade, says Verdict

The report paints a gloomy picture for the future of retail, saying that rising costs and depressed demand could irrevocably reshape the retail landscape.

Verdict says that the cost of running a retail business could explode over the next decade as tighter environmental regulation, rises in the price of oil, more expensive supply chains and a reshaping of economic fundamentals combine. Verdict estimates retail cost inflation to be running at around 4% now; over the next 10 years, it says, this could rise to 9% or more.

At the same time, Verdict believes consumer demand will dip over the next 10 years and that retail spending growth will moderate from an average annual growth rate of 6.0% in the 1990s to 2.6% in the 2010s.

The two driving forces behind the drop in demand are a more financially-constrained consumer, faced with rising household costs and a more uncertain economic backdrop, and a more considered consumer, who will not want to consume as much and be much choosier in buying.

Managing a simultaneous increase in costs and a slowdown in demand will be extremely challenging for the retail sector, says Verdict, which believes that over the medium term the number of retail bankruptcies and job losses will increase steadily.

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