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Retailers 'must adapt to survive' in 2012

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Retailers who adapt to survive using tools including internet shopping and m-commerce to meet the demands of changing consumer demand at home and the appetites of emerging markets will be the best placed in what is expected to be a gloomy market in 2012, according to new analysis.

While reports from both the KPMG/Synovate Retail Think Tank and the Economist Intelligence Unit (EIU) predict a gloomy year ahead for retailers, both also conclude that those who can change to offer new ways of shopping will be best placed to negotiate the year ahead.

“2012 will be about future proofing the business to ensure survival in a market that will not change any time soon,” said KPMG’s UK head of retail, Helen Dickinson. “The squeeze on personal incomes will continue despite the expected decline in the rate of headline inflation.”

The KPMG/Synovate study forecasts sales volumes will fall over the course of the coming year, with shoppers continuing to search out bargains. But, said Professor John Dawson of Edinburgh and Stirling Universities: “High end retailing whether fashion or food, on-line sales, pop-up shops, or retailers with an offer emphasising convenience are more likely to be among those successfully negotiating 2012, but traditional operations targeting middle markets with large numbers of high street stores may find 2012 even more difficult than 2011.”

Tim Denison, of Synovate Retail, added: “For shoppers, ‘value for money’ will remain lodged top-of-mind, eager to ensure that their lower level of discretionary income is spent wisely. The retailer’s response will continue to focus heavily on promotional activity and on helping shoppers establish justification to buy.”

Meanwhile the EIU survey found that while 71% say slow global growth will be the biggest challenge in 2012, those looking to grow their own sales are focusing on developing markets and on m-commerce.

Looking to the downsides, two-thirds of respondents to the survey, all professionals in the consumer goods and retail industries, said they expected store closures in 2012. Less than half expected to grow their operations. And less than half of the panel also thought the euro zone would exist in its current state by 2013.

But almost two-thirds of those who took part said they were looking to emerging markets, which they expect to take up the slack in weak consumer demand closer to home.

Some 61% also said that mobile would become a retail channel in its own right in 2012, though almost half had no plans to focus on social media networks during the year.

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