Today, the British Retail Consortium (BRC) has warned that shoppers and retailers are set for a ‘challenging’ year ahead. The leading trade body has warned that higher living costs will continue to squeeze household budgets and business rates will likely increase, especially given the ongoing disruption to shipments via the Red Sea. Separate figures released on Tuesday also suggested that shoppers held back on buying presents over Christmas, with retail sales significantly lower than the 6.9 percent growth experienced last year. Retailers should expect demand to be down in the first few months of 2024.
2024 looks to be another challenging year for retailers and their customers, and spending will continue to be constrained by high living costs. Retailers will also have to juggle various cost pressures, including the rise to business rates this April. This will be compounded by other emerging issues, such as the disruption to shipments from the Far East via the Red Sea. Political parties must consider this backdrop when they set out their plans for retail in manifestos so they can help support the industry to grow, invest, and serve customers.– Helen Dickinson OBE, Chief Executive, British Retail Consortium
Tony Preedy, managing director at Fruugo urges sellers to be savvier with their sales strategies and product listings:
During periods of economic challenges like this, the knee-jerk reaction for retailers will be to lower prices to encourage sales. However, this will not help stimulate revenue in the long run. With interest rates widely predicted to remain at a high level throughout 2024, naturally, consumers will be more price conscious when it comes to their shopping habits and increasingly agnostic about where they purchase products from. Instead, they will focus more on value and availability.
Retailers need to be savvier about where and how they list products. Rather than relying on just one market, retailers should diversify their audience via cross-border selling which has become much more popular and accessible via marketplaces. Many retailers will also consider cutting marketing spend. This will provide short-term profit and loss (P&L) gain, but it will also bring with it significant medium-term pain.
As the British Retail Consortium (BRC) has reported, brick-and-mortar retailers can no rely on passing footfall for business. Similarly, online retailers will need to work hard to generate their traffic. Home shopping businesses have relatively high fixed costs which makes them highly sensitive to economies of scale; relatively small changes in volumes can have very large bottom-line impact in either direction. Altering marketing strategies, to expand reach to a global scale, can be a highly effective defence against falling local demand.– Tony Preedy, managing director at Fruugo