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Outlook for the UK Retail & Consumer Industry 2022

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Report summary

COVID-19 has profoundly impacted on the UK retail and consumer sector. The enforcement of store closures, social distancing measures and heightened anxieties over viral transmission has elevated ‘digital’ to new heights across the entire customer journey.

The initial stages of the pandemic saw a seismic shift towards ecommerce throughout major European retail markets, as consumers embraced new paths to purchase goods and services.

This shifts will continue to be felt as we head into 2022 as the industry continues to restructure. However, risks and uncertainty for the future of the sector are high. The ongoing impact of supply chain issues, the readjustment to Brexit and rising levels of consumer inflation will form considerable challenges for the industry in 2022.

The “Outlook for UK Retail and Consumer 2022” report will provide in-depth analysis, forecasts and insights which focus on these key challenges and many other consumer trends. The structure of the report is outlined below.


Section 1: Economic outlook and sector forecasts

This section will provide a succinct overview of the macroeconomic environment, focusing on key indicators such as GDP, consumer spending, inflation and consumer confidence. Analysis will then be focused on the consumer sector, drawing out specific insights on the retail and hospitality sector. Forecasts for retail sector growth can be provided for the following sectors:

  • Food & Grocery
  • Clothing & Footwear
  • Electricals
  • Homewares
  • Furniture & Flooring
  • Health and Beauty
  • DIY & Gardening

For each of these sectors, forecasts for market growth will be provided alongside a summary for the forecast rationale specific to the sector.

Section 2: Reshaping the consumer landscape

The second section of the report will provide a broader trends-led analysis of the key factor influencing the outlook for the sector in 2022 and beyond. A combination of Retail Economics’ proprietary data, third party sources and consumer panel data (nationally representative sample of 2,000 households in the UK) will provide insight on five key trends:


Trend 1: Digital Shift

  • Digital shift across the entire customer journey from awareness and research through to returns.
  • Focus on awareness/social media and implication on cost of acquisition.
  • Permanency of the shift towards online by category split.
  • Analysis across specific consumer cohorts including age, gender, region and our own defined consumer segments.
  • Implications on retail profitability as the shift towards online erodes margins and profitability.

Outlook for UK Retail 2022 - Retail Econonimcs

Trend 2: Rebalancing physical retail

  • Impact of the pandemic on physical retail channels. This will include themes such as localism, retail park boost and city centre retail.
  • Impact of structural changes in the labour market, specifically on the impact of working from home and city centre retail.
  • Future of the store and the need to repurpose and reimagine the role of stores in a more complex and digital-dependent customer journey.
  • How are successful retailers providing a blended mix of physical and digital touch points across each stage of the customer journey.

Outlook for UK Retail 2022 Physical Stores

Trend 3: Supply chain disruption

  • Impact of the pandemic and Brexit on supply chains. Focus on shortages of workers throughout the retail supply chain and the impact on retailer, input/operating costs and inflation.
  • Trend towards near shoring, on shoring and re-shoring. Building more resilience into supply chains and the use of technology.
  • Opportunities for those retailers who are engaged in a more dynamic trade environment, switching supply chains and turning new FTAs into a competitive advantage.

Outlook for UK Retail 2022 Supply Chain

Trend 4: ESG/Sustainability

  • Focus on sustainability in the retail sector and the pressure from consumers, capital markets and regulation for change.
  • Strategies retailers will need to adopt on their path to net zero. This may include switching suppliers, retrofitting stores, electrifying logistics, carbon offsetting and much more.
  • What best in class retailers are already doing.

Outlook for UK Retail 2022 Sustainability - Retail Economics

[Continued below...]

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Trend 5: Protecting profitability

  • One of the biggest challenges facing the industry is the further erosion of profitability as the industry undergoes a period of transformation.
  • This will look at the “true cost of online” as retailers battle the challenges of rising costs and squeezed margins as a greater proportion of sales move online.
  • Successful retailers will be those that are nimble enough to react to these challenges and pivot business models to operate in an era of new customer expectations.

Outlook for UK Retail 2022 Profitability - Retail Economics

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