Retail and Wholesale
Performance in the retail and wholesale sector stands much lower than prior to the financial crisis. The sharp decline in turnover has contributed to elevated formal defaults in recent years. Over the short term, the outlook for retail (and consequently wholesale) remains fragile. Conditions will gradually improve as the Eurozone muddles through its crisis and households pay off their debts but the longer term picture looks structurally weaker than before the financial crisis.
Household incomes will be under pressure from relatively weak earnings growth and elevated unemployment over the coming years. Growth in consumer credit is also likely to remain structurally much weaker than before the financial crisis.
As such, we expect retailers to enjoy modest growth at best over the coming years, even as consumer spending power recovers.
In addition to the pressures forced on retailers by the economic squeeze on consumer spending, traditional “High Street” retailers are having to compete with the rise in internet retailing – a major structural change in the way we purchase goods and services in the UK. This change in the way that people are choosing to shop is forcing retailers to adapt to prevent failure.