Companies large and small have been moving from one uncertainty to another during the course of the year. Many started 2022 with too much money tied up in stock after going to great lengths – some had chartered their own container ships – to ensure they had enough to sell for Christmas 2021 in the wake of pandemic-related supply chain issues. The need to stock up was needed was far from the only assumption that quickly unwound. Assumptions that shoppers would continue to buy much more online after Covid-19 than they did beforehand than they did before Covid-19 have also been corrected. UK shoppers who bought more than 39% of their retail purchases online during lockdowns in February 2021 gradually returned to stores once vaccination programmes had been rolled out and trading restrictions had been lifted. By May, around 26% of retail sales were online, a proportion that has stayed fairly steady through the remainder of the year.
In February Russia’s invasion of Ukraine first drove a wide range of brands and retailers – from Ikea, Asos and H&M to Burberry and LVMH – to suspend their Russian sales before eventually closing down their operations in the country. Then it also pushed up the price of energy as the UK and other European countries moved away from Russian gas and, to a lesser extent, oil. That’s led to inflation and a weakening in consumer confidence that means this winter shoppers are more concerned about rising energy bills, with many not now planning to do any Christmas shopping at all.
All of this uncertainty has been reflected in weakening consumer confidence, and ultimately in the balance sheet.
More UK stockmarket-listed retailers issued profit warnings for the third quarter of 2022 than had done so since 2008, an EY-Parthenon Profit Warnings report for the quarter suggested. The number was 69% up on a year earlier, and up by 34% on the previous quarter.
A range of retailers navigating the continued uncertainty gone into administration during the year – from Studio Retail in February to online-only fast fashion business Missguided in May, and multichannel fashion retailer Joules, and digital natives made.com and Eve Sleep – all in November. All have been bought by larger and longer-established companies with store chains. Frasers Group bought both Studio Retail and Missguided, as well as Savile Row tailor Gieves & Hawkes. Next bought made.com and Joules, while Eve Sleep was bought by Bensons for Beds.
Given what has happened to assumptions this year, it would surely be unwise to have too many about the coming year.
This piece first appeared in the RetailX Year in Data 2022 report. Click here to find out more about our research reports