Recently I had a conversation with a colleague of mine about the difficult period for retail in the current environment and he immediately challenged me to say, “When has retail ever not been in a difficult period?”, and that was a fair challenge. I would have to go back to the 1980’s to remember a significant growth period for the UK retail industry and that was at the start of my retail career.
However, if I am to talk about the UK retail industry going through a tough period, Brexit has undeniably had an impact and the start of this has been in the value of the pound. Sterling nosedived by 10% against the dollar the day after the referendum.
A recent article by the Retail Week indicated that UK retailers rely on overseas markets for much of their sourcing and this is having a knock-on effect on their cost base. At the same time, with wage growth failing to keep track with inflation, retailers will be concerned about how squeezed incomes will impact on retail spending.
Rachel Lund, head of retail insight and analytics at the BRC with whom Qlik are an associate member, says: “Brexit is having an increasing impact on consumers through the depreciation of the pound.”
“Although shoppers were initially shielded from rising input costs due to hedging and stock cycles, from the beginning of 2017 shop prices have embarked on an upward march.” This increased inflation – combined with weak wage growth – means that shoppers have become more cautious about their spending.
Lund says: “This squeeze has not affected all consumers in the same way. Despite some room for behaviour change, the fact is that families still need to buy food. As a result, it is discretionary non-food spending that has really felt the brunt of rising prices.”
One way retailers can keep a close eye on the impact of consumer spending and how this compares with their own business versus the sector is to use the BRC Retail Sales Monitor which is powered by the Qlik Analytics Platform. The RSM platform enables retailers to benchmark their performance against rest of the retail market. In addition amongst many insights, the platform allows retailers to analyse your company’s growth ranking by category, by online or by store.
We don’t have an idea how long this disrupted period is going to have on retailers, or how this uncertainty will impact consumer spend, but there has never been a more critical time to use the data inside your retail organization to get ahead of the changing landscape.