Let’s Not Waste a Good UK Retail Crisis

It was once said “let’s not waste a good crisis” and never has UK retail faced such a crisis. The recent Autumn budget from the new labour government has thrown the retail world into uproar – with brands up and down the land facing millions of pounds of extra cost from April 2025 via wage and tax increases. The knock on effect of waiting and then receiving a budget that was poorly received have been seismic.

• Consumer and business confidence slumped on the back of confusion and insecurity
• Online trading has fallen off a cliff as we enter peak training trading season with online sales down in November by more than 10% according to IMRG
• Profit warnings hit a 2 year high in Q3 2024, with 84 listed companies falling below expectations
• Layoffs and store closures are expected in coming months with the likes of John Lewis, Tesco and Monsoon Accessorize all pre-empting very tough decisionst

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What does this “crisis” mean for marketers?

The world of retail is definitely bleak, but with every challenge there is opportunity and with every crisis there are winners as well as losers. Standing out form the crowd has never been so important, so how can marketers do this:

Protect the ‘frontline’ marketing investment

That means maintaining brand and performance investment directly into advertising channels. Very few people sell more by spending less. But as Gartner have shown, there are efficiencies to be found in people and technology and this could be the right time to let AI rip, such as Googles Pmax and broad match capabilities that have reach maturity in the marketing-system. CPCs have actually declined from Covid highs in recent years and returns remain very strong in stable channels such as Google, Meta and TV.

Plan for higher online shares and a greater reliance on the website

There is more bang for your buck with online and it doesn’t necessarily take more people to service the website. With National Insurance Contributions increasing considerably for every employee and the chancellor asking businesses to find efficiencies, you can be sure PLCs will follow through with their forecast that they will need to close stores and reduce headcount. eMarketer forecasts 4% growth next year to, the first since Covid.

Ride the wave of lower inflation and interest rates.

M&S CEO Stuart Machin says the retailer is “very confident” about trading this year, while Tesco chief executive Ken Murphy says he’s “betting on a good Christmas”. Early trading has been weak but with only 26 days between black Friday and Christmas we expect each day to be worth even more. Momentum is key for any business and there is a great deal of optimism from the most experienced and trusted people in retail that the final weeks of the year will be good ones. A great finish to the year can super-charge the start of next year before April budget cost increases kick in.

Ultimately it’s all to play for. The environment will change as will the opportunities in front of the retail market. Plan for the worst, hope for the best and be pro-active.

 

Written by Martin Corcoran, Summit & Productcaster CEO.