Very high

Retail

COVID-19 has impacted a sector already grappling with changing consumer behaviour, increased costs and margin erosion, but opportunities remain.

Sector trends & challenges

  • Shift to online

    Making an efficient and profitable switch to online or multi-modal retailing requires a wholesale operational transformation - from sales and marketing through to distribution, logistics and service.

  • Innovation remains critical

    In a post-pandemic trading environment, retailers will need to focus on differentiating with a distinctive and compelling customer proposition.

  • Reputational risk

    Consumers are increasingly influenced by a range of factors throughout the retail supply chain, from ethical sourcing to biodegradable packaging. Managing these policies requires insight and control.

Sector rating profile

The high volume of restructuring activity has been more visible in retail in recent years than perhaps any other sector. It has been under significant financial stress long before the arrival of COVID-19, as the steady shift to online, increased operating costs and subdued economic growth placed pressure on the bottom line. COVID-19 has accelerated and exacerbated trends and issues already gripping the sector. It has pushed yet more fragile operators into financial stress and distress. However, those businesses which have adapted quickly have seen some strong trading results.

Retail

The UK retail sector is in the midst of what is perhaps the most significant and rapid change in half a century, leaving it grappling with rapidly changing consumer behaviour and extreme margin pressures.

As restrictions ease and retailers re-open, there is still significant uncertainty about the level of demand in stores. We are experiencing historically high levels of online sales, and whilst this may ease as stores open, consumers have formed new habits which will see the shift to online continue to be more prominent in the future.

In a post-Brexit and post-COVID environment, oversight of supply chains is going to be more important than ever. As well as causing potential disruption, the environmental and ethical impact of supply chains is something retailers will increasingly need to consider and control in order to maintain the trust and loyalty of their customers.

Key trends:

  • Continued shift to online from traditional bricks-and-mortar
  • International expansion is becoming an increasingly high priority for UK retailers
  • Discounters (food and non-food) continue to take market share
  • Retailers are witnessing a margin squeeze
  • Importance of convenience: Consumers expect a seamless ‘anytime, anyhow, anywhere’ shopping experience
  • Innovation is key to winning customers and maintaining sales
  • Choice, privacy and purpose will increasingly inform purchasing decisions
  • Reputational risk continues to be a top concern for CEOs

High Street Fashion Retailer

Our team supported an international clothing retailer with over 600 stores across six countries, and an ecommerce platform selling to over 100 countries, to identify initiatives to rapidly reduce its cost base.

HMV Retail Limited

We were appointed administrators to HMV, the largest high street retailer of music and DVDs in the UK.

We traded 129 stores whilst seeking a sale of the business. Following extensive and complex negotiations, a sale of the business was achieved, preserving the majority of sites and employment for almost 1,500 staff.

Find Your Expert

Dom Carter is Interpath Sector Leader for Consumer Markets. This includes Retail as one of three core segments. Dom drives our approach to the Retail sector nationally, supported by Will Wright and Anthony Tan and a wider team of regional specialists. For a full list of our senior people with experience in this sector use the button below.

Our senior team