Another week, another Prime Minister: maybe they should put a revolving door on Number 10? But what, if anything, does this change mean for SME retailers in the Growth 2000?
While it is too early to really tell – and detailed economic policy won’t now be revealed until November – the change at the top has already calmed markets down, which has done little to immediately impact the cost-of-living crisis and rising interest rates and inflation, but signs are encouraging that things may not be as dark as they were a week or so ago.
Calmer markets, a more realistic taxation plan and a dramatic halving in wholesale gas prices thanks to a warm autumn all auger well. While Sunak will have to cut spending and raise some taxes, in the space of a few days the climate has shifted and Christmas for retailers may not be ruined after all.
What consumer confidence needs is stability. If the new PM can make things at the very least static, then Christmas may yet be something to celebrate.
Let’s hope so, because before he took office this week, predictions were dire. Retail sales were predicted to be 3% down on last year – the first fall ever in non-pandemic trading. Consumers are spooked and, with their bills, mortgages and everyday expenses all still rising they are significantly reigning in spending.
Already this is leading to a shift in how consumers shop, with discount and value stores showing early signs of being the real winners this year – especially where they offer click and collect services.
Similarly, shoppers are also using social media a lot more to find bargains and look for deals, with a distinct move in the UK towards socially-led commerce more akin to the Chinese market than previously seen here. Resaerch also suggests that more shoppers are likely to want to also embrace the metaverse as a quasi-social-live-streamed shopping experience.
The cost-of-living crisis is also set to drive a boom in Buy now, pay later (BNPL) use, with one lot of research predicting that, globally, consumers are going to spend around $112bn this year through BNPL, rising to an astronomical $437bn by 2027.
While this may initially look encouraging for retailers, there is the potential for a BNPL crash post-Christmas, with consumers building up unpayable, unchecked debt. This could yet see retailers suffer; watch this space.
For those retailers that still fear the turmoil that has gripped the UK economy – something we can proudly boast is worse here than pretty much anywhere else in the world – there is still the prospect of overseas growth. Eighty per cent of businesses that trade overseas plan to grow their global footprint in the next five years, according to new research.
Data shows that quarter (23%) of UK-based businesses that trade internationally have experienced an increase in overseas activity and a further quarter have increased their marketing to new international markets since 31st January 2020 – when the UK left the EU. Maybe things are looking up after all?