A look into FRP’s ‘Breakfast Club: Retail in focus’

Held at the Barbican, yesterday morning’s Retail Breakfast brought together top experts for a dynamic discussion on the trends, challenges, and opportunities shaping the sector. From shifting consumer habits to innovations in technology, the panel explored the key forces influencing the future of the industry.

Leading the conversation were Tony Wright, FRP’s Restructuring Advisory Partner, Helen Dickinson, CEO of the British Retail Consortium; and James Sawley, Head of UK Retail and Leisure at HSBC – with Laura Dymott, FRP’s Forensic Services Partner, facilitating the discussion.

The panel set the scene by highlighting the ongoing effects of global events. From the war in Ukraine driving up energy costs to shifting trade policies affecting supply chains, retailers are facing a perfect storm. Meanwhile, consumers are being more selective, spending on experiences like travel and leisure rather than traditional retail.

With hiring slowing, pay rises being trimmed, and pricing strategies being tweaked to absorb the impact of the latest budget – some retailers, including major players like Next and JD Sports, could see profits dented by 7-10%. And when businesses feel the squeeze, costs inevitably get passed on to consumers, staff, suppliers, and shareholders.

Consumer confidence:

Despite current economic headwinds, Christmas trading figures saw a modest uplift, but not all categories benefited. The panel noted that food sales grew, while non-food categories, like fashion, fell behind. Post-Christmas, 25 out of 31 trading updates were positive, yet some brands have still struggled, prompting them to seek restructuring advice.

January brought a 2.6% sales boost, but inflationary pressures from rising council tax to potential VAT hikes, have meant that consumers are still cautious. Spending habits are increasingly polarised with more budget retailers like Lidl and Aldi continuing to thrive, while mid-tier brands like Asda and Morrisons face more testing times.

Fast fashion disruptors like Shein and Temu are rewriting the rules of retail, offering unbeatable prices by cutting out supply chain middlemen. Meanwhile, the resale market, led by platforms like Vinted, is booming, a paradox of consumers chasing both the cheapest and most sustainable options.

What’s next for retailers:

As the government prepares to unveil its Spring Budget, panellists emphasised that investors and lenders are watching closely. Interest rates, tax changes, and business rates could have a major impact on retail strategies. Encouragingly, private equity is making a return, and the UK remains a prime market for global investors.

Yet challenges remain. Ongoing fiscal policies could drive more restructuring in the sector, particularly if new tariffs or tax increases materialise. Retailers are also closely monitoring the Employment Rights Bill, which could add compliance costs and reduce hiring flexibility.

How Retailers can stay ahead:

Adaptability is key, retailers are already making strategic shifts, leveraging technology to stay competitive. AI is becoming a game-changer, helping businesses improve inventory management, customer engagement, and operational efficiency.

Retail is at a crossroads. Economic uncertainty is real, but so are the opportunities. The businesses that will thrive are those that balance cost control with innovation, leverage technology, and build emotional connections with their customers.

Key takeaways for retailers:

The panellists each explored their most valuable advice for retailers, concluding with the following key takeaways:

• Put customers first – the customer is king
• Invest in strong leadership – empowering teams, communicating transparently, and navigating change with confidence makes a powerful impact
• Tell a story, build loyalty – connecting emotionally with consumers through storytelling is an increasingly vital tool for justifying pricing and building brand trust