The latest Shop Price Index from the British Retail Consortium shows that shop prices increased by 0.4% in January, the fastest pace of annual growth in nearly six years. Despite this uplift, experts have warned that inflation is not currently a risk provided the UK can avoid a no-deal Brexit.
The increase follows a 0.3% increase in December after a festive season that saw many retailers implement strategic discounting of goods to remain competitive in the lead up to Christmas against both high-street and online rivals.
In 2018 we saw a number of high-profile names reducing staff and store overheads in order to survive and this early increase suggests the outlook remains the same heading in 2019. In fact, Tesco has already announced it is to axe as many as 9,000 jobs this year despite beating the retail blues over Christmas with a strong increase in sales.
This latest increase in shop prices comes in a week where the Gfk Consumer Confidence measure recorded a fall of 14%, highlighting that it isn’t just the competitive space that is hurting UK retail, but the lack of consumer sentiment as well.
Despite Mike Ashley’s one-man crusade to save the Great British high street, the outlook is bleak to say the least and bricks and mortar outlets must consider more experiential tactics to draw the consumer in-store and get them spending. Greater convenience and value bolstered by the integration of a good online presence and technology to aid infrastructure and costs is a must in this day and age, as well as a more experience based offering in-store that goes above and beyond the sale of a product.
Even the simple integration of third-party software can help take the weight and live chat or a managed phone service enables your staff on the ground to maximize their time spent on the shop floor with immediate leads, rather than on the phone or computer to potential leads. Even the use of a mystery shopper can help refine your retail offering, as well as uncovering any areas that need immediate improvement.
Our very own Business Growth Expert and CEO Andy highlighted the tough road ahead for British retail.
“Although a marginal increase on paper, the largest rate of shop price growth in almost six years was inevitable following the competition of the Christmas period, and such a notable spike so early in the year highlights the tough reality facing many retailers in 2019.
A Brexit backed fall in consumer sentiment, coupled with increasing pressure from the online space, has seen the bricks and mortar sector struggle to keep prices low in order to see out the year. However, despite this heavy discounting, the retail rot has continued to spread with even the most established names, such as Tesco, already announcing staff cuts are on their way. When facing such a tough economic outlook, a price increase is often the first course of action, but it will only stem the tide temporarily.”
