Retail sector faces ‘fight to survive’ in the year ahead

The retail sector will “flatline at best” next year, according to predictions issued by the KPMG/Ipsos Retail Think Tank (RTT) as disposable incomes become even more squeezed by a jump in inflation and wage growth flatlines.

The group say lacklustre spending combined with a combination of “continued headwinds in the form of geopolitical and macroeconomic obstacles; an increased number of regulatory compliance issues and ongoing structural change within the industry” could leave retailers fighting to survive.

However, it’s non-food item spending that will be the key area of weakness for the sector as food prices push ever higher.

The RTT said: “This ‘perfect storm’ of factors may even see the industry reach a pivotal point in 2018, with increased levels of defensive consolidation and creative collaboration – as well as the inevitable fall out of casualties – the likely outcome in the ongoing fight to survive.”

The think tank members also said they expect to see close correlation between the outcome of Brexit negotiations and the overall health of the industry, with a ‘soft’ Brexit resulting in meagre growth, and a ‘hard’ Brexit potentially seeing the market contract.