This week, the Webloyalty blog looks at the future of retail, with a specific focus on consumer expenditure and the sectors set to fare the best in the coming years.
According to our recent report ‘The future of retail’, despite modest levels of income growth expected over the next ten years, levels will remain below those before the recession. This is said to be as a result of both higher taxes and higher household costs. Indeed, the retail industry is likely to see some unfavourable changes due to the way in which households divide their spending. Retail is due to decline as a proportion of overall spend, decreasing from taking a 32% share of all household income in 2012 to just 27% in 2022.
The Future of Retail report predicts that, in comparison to the pre-recession era, shoppers will act more cautiously in the future when making retail purchases. In addition, retailers will face increasing competition for a share of a shopper’s disposable income. This will also be a contributing factor to slowing growth seen in this sector.
how is retail spending going to vary?
Consumer spending is set to vary quite significantly by retail sector. The fast growing leisure and entertainment sector for example is set to steal share. Whilst retail will see some growth overall it is predicted that we will not see a return to the pre-recession boom years before the recession. In fact, when compared with the 1980s and 1990s, retail spend growth is likely to be sluggish from 2013 to 2017.
the best-performing sectors
As consumer purchases are driven by basic needs, the food and grocery sector stays buoyant and continues to outperform other sectors when it comes to retail growth. We are expected to see volumes in food decrease and then flatten next year, but this is to be expected due to the rising inflation trend in the market.
Health & beauty and clothing will also be relatively robust and their growth levels continue to increase. These sectors are quite lucrative in the sense that they attain high needs-based elements, which makes cutting production volumes difficult. However, the sectors also continue to allow consumers to indulge and treat themselves at lower prices.
the worst-performing sectors
In parallel, in our research we predict that there are some sectors that are set to see minimal growth rates. These are the furniture and electrical goods, both within the housing market sector. However, the entertainment sectors – music, films and books – are said to suffer the most within the retail section as consumers migrate away from mainstream products to digital media and other subscription based services.
For further insights into this research, download the full Webloyalty research report for free: Webloyalty research – The future of retail.
Source:
Webloyalty research – The Future of Retail: the demand picture
