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UK retailers look back on grim year

By BO LEUNG | China Daily | Updated: 2020-01-15 09:44

The London skyline is seen from Victoria Tower at sunset. [Photo/VCG]

Brexit plays role in making 2019 sector's worst in 25 years, with more pain tipped

Wariness among consumers, a weak economy and uncertainties over Brexit contributed to 2019 becoming the worst for retail sales in Britain in at least 25 years, retail experts said.

A report from the British Retail Consortium, or BRC, a trade organization for retailers, found that sales in November and December were particularly weak, falling 0.9 percent year on year.

The BRC said sales in 2019 fell 0.1 percent, marking the first annual decline since 1995 when it started recording data.

Helen Dickinson, chief executive of the BRC, said that the result was reflected in companies' voluntary redundancy arrangements as well as in the shop closures and job losses that the industry suffered in 2019.

"Twice the United Kingdom faced the prospect of a no-deal Brexit, as well as political instability that concluded in a December general election-further weakening demand for the festive period," Dickinson said.

"The industry continues to transform in response to the changing technologies and shopping habits. Black Friday overtook Christmas as the biggest shopping week of the year for nonfood items."

Karl McKeever, an analyst and director of retail agency Visual Thinking, said: "The ongoing Brexit debate and parliamentary games left many UK shoppers and households uncertain about their future, including the impact on their own personal finances, prospects for jobs and potential redundancies, etc."

Retailers also faced challenges as consumers become more concerned about climate change, including the effects of consumerism relating to plastic waste and wasteful fast fashion that "have seen consumers reorientate to a low price/value mindset", he said.

"I believe this has fundamentally changed the nature of shopping in the UK-and for a generation," McKeever said. "Since 2008 and the credit crunch British consumers have been increasingly embracing retailers operating in the low price-and reduced expectations-arena."

The BRC said that, taking November and December together to iron out the Black Friday distortions, like-for-like sales declined 1.2 percent compared with the same period in 2018.

There were significant store closures throughout 2019 with Mothercare UK, Bonmarche and luxury jeweler Links of London going into administration.

Retailers such as Arcadia group's Topshop, Dorothy Perkins, Miss Selfridge, as well as the likes of HMV and Laura Ashley, closed a number of stores as part of restructuring plans.

The rise of online shopping has changed consumers' behavior as many shoppers spend less in stores and instead hunt for online bargains.

"Shoppers have cashed in on bargain prices, regular discounting and in-season markdowns, and now wait for lower prices, use online voucher codes, price matching or other promotional activity, e.g. Black Friday, to their benefit," McKeever said. "Shoppers know they don't have to wait too long for prices to come down."

Paul Martin, UK head of retail at research firm KPMG, said: "Consumers clearly favored logging on to walking in, with online sales up 12.8 percent in December. However, if taking a two-month average, growth online was clearly muted at only 2.6 percent."

Dickinson said public confidence in Britain's trade negotiations will have a big impact on spending over the coming year.

"There are many ongoing challenges for retailers: To drive up productivity, continue to raise wages, improve recyclability of products and cut waste," the BRC chief executive said.

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