In what has been another challenging year for businesses all across the UK, the retail sector has seen more turmoil than ever.
With Brexit still rumbling in the background, supply chains in crisis and businesses only now getting to grips with the full fallout of COVID-19, it can be hard to plan for the next big challenge, whatever that may be.
So what are these challenges? And how can you, as a retail business owner, plan for them? Let’s find out.
Moving online
The footfall of high street shopping has greatly improved since the record lows of the pandemic, but the simple fact remains that people just don’t shop on the high street like they used to.
During the various UK-wide lockdowns, consumer habits moved overwhelmingly towards online shopping – forced, in part, by the mandatory closure of non-essential businesses.
According to the Centre for Retail Research, the UK has seen online shopping increase more quickly than any other country – at the expense of physical stores.
And with the ongoing cost of living crisis, it’s highly likely that fewer consumers will make shopping on the high street a priority.
So now is the time to list your stock online, if you can. Even having a social media page that highlights your new items could make a significant difference. This way, you’re boosting digital awareness of your business and taking the pressure off selling items in your physical stores.
Business rates and inflation
The business rate multipliers for the current year have already been frozen at 2020/21 levels, and this measure will continue until 31 March 2023, keeping the multipliers at 49.9p (small business) and 51.2p (standard).
Many businesses already pay no business rates due to small business rates relief, with retail being one of the sectors benefiting from a 66% discount. For 2022/23, those not qualifying for small business rates relief will receive a 50% business rates discount, subject to a cash cap of £110,000 for each business.
Eligibility for the 2022/23 50% discount will not be as wide as the current 66% discount, although detailed guidance has not yet been published.
So while this does spell good news for retail businesses, the rate of inflation and huge increase in energy prices means these numbers could make little difference.
The rental market also faces similar uncertainty – it’s not out of the question that businesses will see their rents go up in accordance with inflation elsewhere.
Cost of living crisis
Along with skyrocketing inflation in 2022, merchants must consider the cost at which they price their goods and the effect it has on their consumer base.
Anti-poverty activists have recently drawn attention to the fact that the “poorest” consumers—those who are most inclined to utilise supermarket discounts or own-brand ranges—are disproportionately affected by inflation.
A basket of products, as emphasised by well-known anti-poverty crusader Jack Monroe, was discovered to have increased by 56% after inquiry.
As a result, numerous shops are under pressure to freeze prices or expand the availability of their value ranges to aid customers’ tighter budgets.
What can I do as a business owner?
Retail firms may prepare for whatever the year has in store by planning as much as possible, from price freezes to moving affairs online.
With so much uncertainty, it can feel like a difficult task to try and meet the constantly changing demands. But there is always hope – if you plan and adapt where possible, you’ll put yourself in a stronger position to ride out the recession.
Get in touch for any tailored business advice about anything discussed in this blog.
