The future of retail was uncertain even before the country voted to leave the European Union.
Now, grocers and high street department stores have more than just discounters and the internet to deal with: they have to navigate changing trade relationships, weather a possible downturn in consumer sentiment, and adapt to shifting spending patterns as well.
So what’s next for UK retail? Diane Wehrle, insights director at Springboard, says footfall “tumbled” on the weekend after the referendum but cautions that we shouldn’t jump to conclusions about consumer confidence too quickly.
“Most people in the country voted for Britain to leave,” she said. “Those who voted will not be feeling downhearted. They may feel quite energised.
“No one knows what is going to happen or the degree of the connection between the financial markets and consumer spending patterns. But people feel more connected to the political stuff. The longer term impact may be more severe if we can’t settle our political landscape in terms of our economic security.”
Philip Dorrell, partner at Retail Remedy, reckons consumer confidence will be collateral damage in the war engulfing Westminster.
He said: “There will be an erosion of consumer confidence as the political atmosphere is very uncertain, and as soon as that is uncertain, the financial markets are uncertain.
“The macroeconomics determine there will be a slight downturn.”
Just like the politicians, some retailers are likely to end up more bruised than others. The experts all agree: people will be shunning their more extravagant purchases.
Fraser McKevitt from Kantar Worldpanel said: “Big-ticket items are obviously at risk. Eating out suffered in 2008. People have been wanting to spend money on experiences, rather than things, in recent years. But if consumer confidence dips, then that is a sector that is in the firing line.
“On the non-discretionary side, I don’t think we’re going to see a huge impact. In 2008, people still bought the same number of groceries, although there was a bit of a move to cheaper retailers.”
Maureen Hinton, retail analyst at Conlumino, says food prices might start to rise towards the end of this year, but people will always need food.
The real winners from Brexit will be those who can attract cash from international buyers. Hinton said: “With sterling falling, the luxury end of the market will be competitive, with the Chinese in particular, given the weakness of their currency, we have now become quite attractive.
“Take Burberry for example – their sales are to the travelling Chinese. Harvey Nichols, and Selfridges as well; they have an international customer base.” Harrods is also tipped as a winner.