As Harry Selfridge once said: “People will sit up and take notice of you if you take notice of what makes them sit up and take notice.” Never has this customer-centric advice been more apt than in today’s fast-moving retail world. UK retail sales totalled £321 billion recently and whilst the sector is generally thriving, consumers are demanding greater variety, an enhanced experience, easier access, improved payment and faster delivery.
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Key challenges for the retail sector
At its simplest, the technology revolution in retail means more channels and more data. The internet accounted for 16% of all retail sales in 2015, estimated at £52bn in value. More channels means being able to reach consumers through their various digital devices at any time and place. Customer data now has the potential to combine what people have bought with their movements, location, social circles, media consumption, interests and even purchase intentions.
Retailers are benefiting from improving consumer confidence but it’s also clear that they want to spend less and buy more. Profits are also being squeezed as the cost of sourcing or manufacturing stock is increasing, due to rising energy and raw material prices and sustainability issues. In addition, despite a third of high street retail units being empty for the past few years, rents in many areas are still considered too high.
Retail supply chain management
In an increasingly globalised supply chain, it is essential to negotiate with suppliers using structured volume discounts and consignment stock agreements. Inventory control is essential for store-based retailers, as property costs continue to rise but even online retailers need to meet increasing customer demand for next day delivery, whilst keeping delivery costs competitive.
Retail is the UK’s largest private sector employer with 2.9 million employees, half of whom work part-time. The increase in the national minimum wage and requirements of pensions Auto-Enrolment will push up costs and reduce margins for the sector. The growing unpopularity in zero hours contracts is also expected to make hiring good people more difficult.
the investment required in systems and fit-out can be a strain on cash flow but tax reliefs are available to minimise cash flow disruption and reduce the retailer’s tax burden. Determining the correct VAT treatment can also be a challenge, particularly where businesses are buying and selling goods overseas, or making online sales.
Proven Retail Sector Advice & Service Experience
We advise retail, wholesale and online retailers, as well as sector-dependent clients. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice.