Pent up savings, more confident consumers, and a successful vaccine roll-out will all contribute to a brighter outlook for the UK’s retail sector, experts from the KPMG/Ipsos Retail Think Tank have suggested.
The second half of the year could see some respite for the embattled retail sector, suggests the group, but has warned that much like 2020, fortunes would be mixed for different retail categories due to the ever changing consumer behaviour.
As reported by the Retail Gazette, the Retail Think Tank has also warned retailers that there were still ‘very tough times ahead’, with new national lockdowns keeping non-essential retail stores closed well into the first quarter. However, it remains ‘cautiously optimistic’ for the outlook of 2021.
In its latest report Outlook for 2021, the think tank stated that even with the mass rollout of a vaccine underway, the legacy of the pandemic and enduring restrictions are set to impact on the economy well into 2021 and beyond.
The Retail Think Tank believes that the tough economic background means the retail sector can’t expect to see any noticeable improvement in spending patterns much before the second half of 2021.
It also highlighted how business rates were currently accounting for up to 50 per cent of retailers’ property costs before the one-year holiday was implemented at the start of the pandemic, well above those in other sectors and contributing 25 per cent of all business rate revenue raised.
The report has also addressed the way in which the pandemic has changed consumer behaviours. Consumers in the non-food sector are more likely to start to revert to pre-pandemic behaviours, it suggested, while the shift in the way people now shop for food is expected to be more permanent.
It has stated that local and neighbourhood shopping is also expected to become even more prevalent in 2021, good news for independent retailers who have been rallying the ‘shop local’ campaign in the months leading up to the Christmas trading period.
The think tank highlighted that while it believes the retail sector will not shrink back further in 2021, but forecast a rate of growth that could be anywhere from flat to three per cent for the year as a whole.
It added that recovery and growth would likely take part in the second half of the year, driven by the non-food sector which should be well placed to bounce back as the vaccine rollout really gathers pace, allowing for non-essential retail to reopen again and boosting consumer confidence.