It would probably be quite disturbing for retailers to hear the latest predictions from the Centre for Retail Research (CRR), which painted a grim picture of the state of the industry and its development over the next five years. The researcher forecast that by 2018, about one in five stores in the country could have closed their doors.
CRR’s bleak forecast comes at a time when more and more consumers are switching to the Internet when looking to buy products, which could force about 62,000 retail stores to close down.
CRR projected that in five years, the total number of stores will decline by 22%, slipping to 220,000 from 281,930 currently. The drop will be triggered by the growing popularity of e-commerce, which is expected to double its share in the retail sales mix to 21.5%, from the present 12.7%.
In addition, if current trends continue, there could be 316,000 people left without a job by 2018, CRR said, describing current market developments as a ‘looming retail crisis’.
High-street stores are those set to bear the brunt of the huge growth exhibited by online retailers, as customers are steering away from the high street to shop online instead. In 2000, the share of consumer spending in high street shops was 50%, but according to CRR, it will contract to 40.2% by 2014. Consumer spending has increased by 12% since 2006, however this growth has been counterbalanced by retailers’ operating costs, which have jumped by 20%.
CRR believes that in order to respond to consumers’ changing shopping behaviour, retailers need to adopt wise strategies and make tactical decisions about store numbers, types and locations. It is also important to fully integrate physical shops with their websites and other channels such as mobile and social media, according to the researcher.