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Retail employment down as market structure evolves

Structural changes in retail triggered by the advent of online sales and other technologies has seen year-on-year total employment drop 2.4 per cent in Q1 2019, a higher reduction than the one in Q4 2018, at 2.2 per cent.

ONS data via the British Retail Consortium (BRC) has also revealed a decline in employment of 2.1 percent in Q4 2018 and 2.9 per cent in Q3 2018.

However, the UK economy as a whole has witnessed the highest record of employment since ONS data records began, a contrast to the downward trend.

17 per cent of retailers indicated plans to reduce staff in the coming quarter, above the comparable figure of 13 per cent last year, and 67 per cent seek to keep their staff numbers unchanged (down from 75% last year).

Store growth was steady at 2.3 per cent in Q1 2019, the same rate of change as in Q4 2018. Positive store growth found in the BRC sample is in contrast to the ONS figures showing that the number of local units is in decline in the UK. This is due to the expansion of smaller format stores by several retailers in the sample.

In Q1 2019, total hours were down 2.7 per cent year-on-year, similar to the reduction of 2.8 per cent of Q4 2018. The majority of survey participants reduced labour requirements compared to last year, with some increasing stores and also hours and employment.

Discussing the ONS results, Helen Dickinson OBE, chief executive, British Retail Consortium, said: “Yet again, the number of retail jobs fell during the first quarter of this year, with a 2.4% per cnet year on year fall in employees; this would be equivalent to losing 74,400 people across the retail industry. While the number of stores rose, this was mainly driven by an increase in small format stores, with many larger stores closing — resulting in a net job loss. And more jobs are likely to disappear unless there is a shift in Government policies. 

“Retail is undergoing a period of unprecedented change in response to new technologies and changing consumer behaviour. The investment required to successfully navigate this transformation is being held back by the rising cost of public policy. Over three million people rely directly on the retail sector for jobs, with many more working throughout the supply chain. Yet spiralling business costs pose a grave threat to these jobs – as recent administrations, CVAs, and store closures show.”

Discounting drives online purchasing decisions

Two thirds of Britons have made an online shopping decision based purely on a discount that was available, with 80% of 18-31 year olds admitting to the practice.

A study, by global affiliate network Awin, has found that found that 66% of Britons have used a price comparison site in the past six months, whilst 59% have used an online voucher code in the same time frame, with a further 66% admitting to using any form of affiliate service to make an online purchase.

What’s more, almost half of consumers (47%) see the importance of bloggers and specialist websites to help inform their online purchases.

The survey polled 2,250 people over the age of 18.

The report found that more than half of online shoppers have interacted with an affiliate service in the past six months, and the findings were echoed by the results of the survey, which found that as many as 66% of Britons have used an affiliate service in the past six months, predominantly though the use of online voucher codes or price comparison sites, used by 59% and 66% respectively.

Online voucher codes were most popular amongst 18-31 year olds, with 67% using one in the past six months, whilst price comparison sites were most popular for 32-45 year olds, with 75% visiting one in the last half a year.

In terms of the savings made by consumers through an affiliate channel, 90% of those that have used an online voucher code said that they saved money in the process, whilst 88% of those that used a price comparison site admitted to the same.

The importance attached to affiliate sites was also looked at, and it was found that 85% of respondents answered that price comparison sites were ‘somewhat important’, ‘very important’ and ‘extremely important’, whilst 81% answered the same in reference to online discount code sites.

Almost half of respondents (47%) said that they saw the importance of bloggers and specialist websites when buying online, and 52% answered the same in relation to cashback sites.

Consumer online shopping habits were also explored, with it being found that 67% of all respondents had impulsively purchased a product online based on the fact that it was discounted. 18-31 year olds were found to be the most impulsive, with 80% admitting they have made last minute purchasing decisions based on markdowns alone.

It was found that 72% of consumers first use a search engine to begin their online shopping journey, particularly older shoppers, with 80% of 46-59 year olds admitting to this. Conversely, 30% of 18-31 year olds would look on social media to begin with, compared to 10% of all participants. Consumers were found to be more likely to visit a comparison site first (9%) than they were to visit Amazon (8%).

Online voucher codes were most likely to be used when purchasing fashion products online, with one third (33%) saying they were ‘extremely likely’ to use one when buying clothes, whilst comparison sites were most likely used for travel, with 77% revealing they were ‘extremely likely’ to utilise them when booking a holiday.

The report found that 60% of airline sales on desktops are driven by price comparison sites, and users will visit an average of 38 different websites before committing to an online travel purchase.

Commenting on the findings of the study, Kevin Edwards, Group Client Strategy Director at Awin, said: “Whilst consumers might not even realise it, affiliate channels are often a core part of purchasing products online, and are a much more user-friendly way of advertising a product. Whilst those of us in the industry are already aware of its widespread manifestation, this survey shows how important affiliate channels are for online shopping and ecommerce.”

London the top choice for luxury retailers

London was ranked the number one location for luxury retailers last year, with more store openings than Paris, Tokyo and Singapore.

According to data from Savills, London accounted for 9.6% of all luxury store openings worldwide, with 33 luxury retailers opening their doors in 2018, up 38% on 2017.

Luxury fashion brands accounted for 45% of store openings – although this was down on 2017 as specialist accessory brands, focused on bags, footwear and eyewear, increased their share from 20% to 24%.

Specialist jewellery and watch brands also continued to account for a sizeable number of store openings, at 24%.

Globally, the research found that luxury brands opened 16% fewer new stores in 2018 compared with 2017, suggesting brands are focussing on core, strategic and often underrepresented markets. 

Bangkok was a close second to London, with 6.7% share of store openings, with the opening of the ICONSIAM mall a direct reason. Dubai and Hong Kong shared the third position, with Dubai, Paris and New York all making the top ten.

“In spite of the headwinds facing UK retail, the London luxury market is looking not only resilient but is also offering attractive opportunities for those brands who want to enter the market, as well as those looking to improve their physical presence with more high profile, experiential spaces,” said Marie Hickey, retail research director at Savills.  

“With a 38% increase in luxury store openings last year, the city became the most active destination globally for high end brands, up from joint fourth in 2017.”

Anthony Selwyn, head of London and international retail at Savills, said: “Last year we saw the big luxury brands retrench to the core cities and we expect these global destinations to remain the key focus for luxury brands wanting to expand or improve their physical profile in 2019. 

“For the UK market, it’s great to see London leading the way, and with the core cities predicted to be the main areas of interest for brands this year, the future looks positive the capital.”

UK Consumer Confidence: ‘Stoic amid fear of the unknown’

New data from GfK indicates that consumer confidence rose in February despite huge unknowns over Brexit.

The research outfit says its Overall Index Score in February 2019 was -13 as three key measures increased and two stayed at the same level – to the surprise of its analysts.

The UK Consumer Confidence Barometer is conducted by GfK on behalf of the EU, with similar surveys being conducted in each European country.

Personal Financial Situation

The index measuring changes in personal finances during the last 12 months stayed the same in February at 0; this is also the same as this time last year.

The forecast for personal finances over the next 12 months stayed the same at +1; this is four points lower than February 2018.

General Economic Situation

The measure for the general economic situation of the country during the last 12 months increased two points to -33; this is four points lower than February 2018. 

Expectations for the general economic situation over the next 12 months increased one point to -38; this is 12 points lower than February 2018.  

Major Purchase Index

The major purchase index increased three points in February 2019 to +5; this is five points higher than February 2018.    

Savings Index

The savings index has increased four points in February to +18; this is six points higher than at this time last year.

To download the full set of charts for the GfK Consumer Confidence Barometer UK – February 2019 click here.

Joe Staton, Client Strategy Director at GfK, said: “Despite a slowdown in overall growth and concerns about the impact of Brexit uncertainty on the UK economy, topline consumer confidence is stable again this month. 

“Although bumping along in negative territory, the Overall Index Score is not showing any sign of making the dramatic drop seen after the June 2016 Brexit Referendum or in the early days of the last financial downturn. 

“While the view on personal finances looking at the year to come is still marginally positive, the continuing depressed sentiment towards the general economic situation might point towards the calm before the storm of post-Brexit headwinds and potential negative economic outcomes. 

“Are we on the edge of some kind of economic or livelihood precipice? Consumers are like markets, they respond to certainty and that’s in short supply just now. It is worth bearing in mind that many economic indicators (employment levels, wage growth) remain positive. But it is frankly amazing that confidence is so stoic and stable in a world of sharp political instability and fear of the unknown.”

Shop price inflation at highest for six years

For the first time in almost six years the price of non-food goods has risen, albeit slowly, as cost pressures which had been building in the supply chain over the past few years fed through into prices.

According to the latest figures from Nielsen and the British Retail Consortium (BRC), this adds to gradual ongoing rises in food prices, resulting in the highest overall shop price inflation since March 2013.

Among the key data points are:

  • Shop Price inflation accelerated in February to 0.7%, up from 0.4% in January. This is the highest inflation rate since March 2013.
  • Non-Food prices rose by 0.2% year on year in February compared to the January decrease of -0.2%. This is the first time that Non-Food have been inflationary since March 2013.
  • Food inflation inched up slightly in February to 1.6%, up from 1.5% in January.
  • Fresh Food inflation accelerated to 1.7% in February, up from 1.2% in January. This is the highest rate since January 2018.
  • Ambient Food inflation eased in February to 1.5%, down from 1.9% in January. This is the lowest inflation rate since May 2018.

The key driver of the upward movement in year on year Shop Price Inflation in February was Non-Food, while Food price inflation overall was broadly stable.

In its commentary, the BRC points out February is usually a month when Non-Food retailers introduce new products at full price, after a January of clearing stock and deep discounting. Therefore, it’s no surprise that Non-Food prices are higher month on month.

In contrast, Non-Food prices are higher year on year for the first time in six years. This, the BRC says, reflects the ongoing slow release of significant cost pressures which have built up in the supply chain over the last two years, notably from the currency depreciation in 2016 and the rise in oil prices last year.

However, Non-Food prices remain below levels seen in 2016. And, given weak discretionary spending and intense competition, it is likely that heavy discounting will be back.

Mike Watkins, Head of Retailer and Business Insight at Nielsen, said: “Whilst shop prices have moved upwards slightly in February, economic growth is slowing and there is still weak retail growth. So, for as long as shoppers continue to be cautious, it will be difficult for the industry to pass on in full any cost price increases coming through the supply chain, particularly as around half of households are still reluctant to spend and many have concerns about the economy. Retailers will need to simplify the shopper experience, improve customer engagement and deliver good value for money to encourage shoppers to spend.”

Property demand in UK grocery sector ‘remains strong’

Property investor demand for UK grocery assets has remained strong even in the face of wider retail sector uncertainty, the proposed Sainsbury’s-ASDA merger and Amazon’s anticipated entry into the sector, according to research.

In its latest UK Grocery Real Estate Review, Colliers International reports that £1.06 billion of supermarket assets were traded in 2018, with most demand coming from UK institutions.

Amazon is believed to be planning to open 200 UK convenience stores and is about to start testing the market with a series of small, in-town stores with the first units in Central London rumoured to be under contract.

The supermarket sector is also awaiting the Competition and Markets Authority’s decision on the Sainsbury’s-ASDA merger.  Whatever the result, the main beneficiaries of the outcome may be Amazon.

James Watson, Head of UK Retail Capital Markets at Colliers International, said: “In stark contrast to mainstream retail, the grocery sector is performing well with the main operators reporting solid trading figures.

“Consequently, 2018 was largely business as usual for property investment in the sector with volumes only marginally down and returns in line with the 10-year average.”

“Even if Amazon do enter the market it looks like their offer will be predicated on physical stores rather than a predominantly online offer. As such, this may – in time – create a further pipeline of investable assets.”

Writing in the report, Fraser McKevitt of Kantar Worldpanel, said: “Groceries are to some degree insulated from the worst challenges from online competitors. There is something inherently physical about the food, drink and toiletries people buy.

“In the last quarter of 2018, 20 per cent of households bought at least some of their groceries online – this was barely changed from the year before. Where growth did come, it was from the already converted shoppers spending more.

“When shoppers do choose to buy online, their decision is highly influenced by where they do their bricks and mortar shopping.”

“If the CMA blocks the ‘SASDA’ takeover then it will leave the two businesses worse equipped to deal with an increasingly competitive market. The CMA needs to look one step ahead and consider what this means should Amazon make a meaningful incursion in to the grocery market”.

Shoplifting is up – and self-service checkouts are the cause

Figures collected by 27 police forces from across the UK and released under the Freedom of Information act has revealed an increase of shoplifting of more than 7% over the past four years.

The shocking statistic found there were 78,110 shoplifting incidents in 2017 compared to 74,662 in 2016, 74,124 in 2015 and 72,423 in 2014.

The rise of self-service checkouts at supermarkets is attributed as a major factor.

Other incomplete figures show there were a further 46,973 shoplifting incidents along with an additional 1,659 thefts at supermarkets during 2018 until the end of the summer period.

“These figures indicate that, despite the best efforts of our members, criminals are increasingly targeting supermarkets,” said James Martin, Crime and Security Adviser at The British Retail Consortium.

“Ultimately, the costs are borne by everyday shoppers and those who rely on retail for their livelihoods. We acknowledge the difficult resourcing and prioritisation decisions which police forces face, but it is clearly time that every police force gives retail crime the strategic priority it deserves.”

Data shows that there were over 400,565 shoplifting incidents between 2014-2018 made to the police to England and Wales, with a further 59,121 call-outs recorded by police from supermarkets, such as pickpocketing, bicycle theft and raiding coin meters.

John Apter, national chairman of the Police Federation of England and Wales said: “The sad fact is that as forces struggle to meet 999-call demand, incidents such as these are increasingly likely not to be attended by officers at all which, as a serving police constable with 26 years’ service, I find quite shocking.”

Brits to spend £25bn shopping on their phones in 2019

Price comparison website uSwitch has found that Brits are likely to spend a whopping £25 billion pounds on their phones and tablets in 2019.

30 million Brits are predicted to use their phones or tablets for shopping over laptops or desktop computers this year – a massive rise of 66% – than in 2018.

Other stats reveal that half of those polled (58%) would buy online using a smart device rather than make a journey to a shopping centre (56%), with two thirds (66%) admitting shopping on smart devices was convenient and 36% saying it saved them money.

Clothes are the most popular item bought online (69%), followed by books (51%) groceries (47%) and theatre/cinema tickets (43%).

Amazon and eBay topped the polls for the most popular website destinations for shoppers at 89% and 63% respectively, followed by Argos (41%), Tesco (35%), M&S (25%), Asda (25%), Sainsbury’s (22%), John Lewis (20%) and Curry/PC World (17%).

Being comfortable is a major factor too, with 78% of those polled admitting to shopping on their phone in the living room. 14% admitted using the phone to shop at work, along with 8% on the daily commute.

Surprisingly, the bathroom is the preferred place of phone shopping for those under the age of 35, with 14% admitting they did so over the kitchen as a location (13%).

Ru Bhikha, mobiles expert at, said: “For so many of us now, our smartphone is an extension of our hand and we have it with us at all times, meaning that we can shop whenever and wherever we like. Our handsets allow us to window shop all the time, and if we see something we like, it is right there at our fingertips.

“With smartphone and tablet shopping now a £25 billion industry, it’s hardly surprising that major retailers have long adopted a mobile-first approach to their websites and have even introduced their own apps to make the user experience as easy as possible. Cleaner user journeys and the ease of one-click purchasing will only add to the number of people shopping on their phones and tablets.

“Providing your phone has a decent connection to either a good broadband supply or 3G or 4G, you can shop any time and any place – and this year more Brits than ever look set to take advantage of that.”

UK retailers ‘struggle to keep up with eCommerce’

That’s the conclusion of a new report, which says that many retailers are attempting to tackle expansion of their online business without the right technology or partners.

Omnia surveyed 150 retailers across the UK as part of its Retail Pricing Wars report, with the top line data indicating retailers struggle to keep up with the rapid pace of e-commerce, with many fighting the tide without the proper technological tools.

This reflects recent findings from Microsoft that UK retailers fall behind in integrating AI and automation into business.

Key findings of the Omnia research include:-

  • 96% of the top UK retailers have a pricing strategy, but almost half base that strategy on their competition’s prices
  • 88% of those surveyed carry out price checking, but less than 50% react when their competitor changes the price of a product
  • 34% of retailers feel pressure to change their prices regularly, but only 15% make those changes frequently
  • UK retailers lose roughly 1.97 million hours (that’s 246,000 working days) each week on competitor price checking

Click here to download the full Retail Pricing Wars for free.

Footfall increases in the run up to Christmas, but remains down YoY

Retail footfall is rising from week to week in the run up to Christmas, increasing by +3.1% last week from the week before, according to Springboard.

However, despite being higher week-on-week, footfall is significantly reduced from last year, with an annual decline of -4.5%.

Springboard data says that in High Streets and shopping centres – which make up the majority of destinations – the drop in footfall was even more severe at -5.2%, with a lesser drop of -2.2% in retail parks.

Footfall was down annually on every day last week apart from Sunday, when it rose by a huge +26.3%. However, Springboard says this was in comparison with Sunday last year when the weather was extremely cold with treacherous travelling conditions.

The results are a continuation of the poor performance in November and in the first two weeks of the month, and are a clear indicator that consumers are railing back on spending.

Whilst some of the trips previously made to bricks and mortar stores are likely to have been diverted online, the vast majority of spending remains in store; and so the significant decline in footfall is clear evidence that spending this year is constrained.

This conclusion, says Springboard, is reinforced by the fact that footfall declined in all areas apart from Northern Ireland, and was in excess of -2% in every UK geography and more than -5% in five geographies.