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The Retail Industry

Inflation, rising interest rates, and recessionary pressures are expected to disrupt the retail industry. Despite these hurdles, modest retail sales growth is predicted, with a brighter outlook in the latter half of the year.

4%

In 2023 is expected a value growth of 4% for the sector – just slightly higher than in 2022 (Retail Gazette, 2023)

26.5%

The sector’s online penetration rate is expected to be 26.5% in 2023, broadly unchanged from last year as e-commerce continues to rebalance after the pandemic (Retail Gazette, 2023).

6%

Retail Economics predicts that grocery will be the strongest performing category, with sales up 6% on last year (Retail Gazette, 2023).

£441 b

The total value of UK retail sales in 2022 was £441 bn (Retail Economics, 2023)

3M

3M people were employed in UK retail in 2020 (Retail Economics, 2023).

The retail sector includes any business or individual selling products directly to consumers.

The retail industry includes shops, department stores, supermarkets, market stalls, door-to-door salespeople and internet retailers (House of Commons Library, 2021).
For many, 2022 has transitioned from a health crisis into an economic one. The ongoing fallout from Covid-19, the introduction of escalating geopolitical tensions, and a cost-of-living crisis are creating the perfect storm for continued disruption. Inflationary pressures, interest rate hikes, and the beginnings of an economic recession will further shake up the retail and leisure industry (Retail Economics, 2023).

Industry Challenges

Fast-track digital integration (Retail Economics, 2021)
Automation and human staff reductions (Data Centre Dynamics, 2021)
Cost-cutting endeavours (Retail Economics,2021)
Retail sales in Great Britain fall amid supply chain disruption (The Guardian, 2021)
Staff Turnover (Shopify, 2022)

There are still strong headwinds facing households as the economy enters a period of volatility, elevated inflation levels, higher interest rates and a recession likely to persist throughout 2023. (Retail Economics, 2023).

Retail sales will continue to be challenging in the first half of 2023. The BRC predicts retail sales will increase between 1% and 2.3% in the year’s first six months. However, the trade body forecasts a brighter second half, with retail sales expected to grow from 3.6% to 4.7% (Retail Gazette, 2023).
To stay competitive in the next era of retail, leading retail companies should focus this year on three priorities: workforce retention, supply chain resiliency, and digital investments (Deloitte, 2022).

Industry Opportunities

Omnichannel retail (Retail Economics, 2023; UK Daily, 2023)
Sustainability embracing by consumers