UK retail sector may see a challenging 2023

Written by Kunal Sawhney, CEO, Kalkine Media

Retailers in the UK have experienced a roller coaster ride in 2022. All have played their part in the UK economy, from the Russia-Ukraine war to skyrocketing inflationary pressures to a full-fledged cost-of-living catastrophe. As a result, retailers’ profits have been significantly hit due to these factors. Additionally, the overall macro conditions have shifted consumer preferences as households have been downgrading to survive the tough times.

During the pandemic phase, digital players have enjoyed a boom. Nevertheless, after reaching record-high levels, e-commerce sales have plunged as online players struggle to tackle the growing supply-chain problems and rising consumer returns amid the deteriorating macroeconomic environment. Lockdown’s pent-up demand has pushed the shoppers back towards a bricks-and-mortar experience. This would mean that the vendors with just an online presence would be worse off the net year than the vendors offering a hybrid mix to shoppers.

Sustainable fashion is expected to boom in 2023. According to a study by Thredup, a globally leading online thrift store, the second-hand clothing market is projected to expand by 127% by 2026. This growth would be three times more rapid than the overall market. Second-hand apparel is generally inexpensive, more ecological, and trendier among Gen-Z and millennials.

Retailers have gradually shifted away from high-street and departmental shops towards stores in retail parks. The running costs are comparatively lesser at retail parks and provide retailers with more space, which have together led to higher sales. Retail parks also have transportation linked around them which helps in efficient distribution. They are thus expected to become a significant part of the plan for the future of the high street.