Mintel Retail Predictions outline the future of the high street

Speaking at Mintel’s “Big Conversation – The Year Ahead in Retail” event this week, Mintel’s Director of Retail Research, Richard Perks, details Mintel’s exclusive UK Christmas 2012 retail research and looks at what we can expect for retail for the year ahead:

“The prospects for retailers are good. Short term – with confidence recovering we can be modestly optimistic for 2013. We can expect retail sales growth of between 2.5 – 3% again. Consumers will be cautious, but barring a storm from the Euro-zone, they should be prepared to spend more.”

“Longer term – we are optimistic for the future for the high street, but retailers must have a strong multi-channel offer with first class service. Consumers still want to save, but after that the winners in an upturn will be in leisure, so retailers and high streets must respond with a more dynamic environment. The high street is changing – it should be more than a place to just buy stuff, it needs a greater sense of theatre. High streets are places to meet friends and linger, they need to offer so much more than shopping. So, high streets need investment and if they get that then they have a rosy future.”

The development of online shopping has raised the stakes for retailers:-

– They must have a high quality online offer.

– They must be clearly targeted on their own, clearly defined customer base.

– Value for money is paramount and that is quality, service and range, store appearance as well as price. In fact, the ease of comparing prices, such as over a mobile phone, is taking price out of the equation altogether.

“Mintel is optimistic for the future of the high street, because it already seems that the combination of the Internet and stores is the one which consumers favour most – evidenced from the fact that multi-channel retailers grew faster than the pure plays over Christmas and the click and collect option is becoming increasingly popular. It’s not how you buy, but who you buy from that matters. To the customer it is all just shopping.”

Where will our money go?

“Mintel’s research also highlights where Brits intend to spend any extra cash they may be lucky enough to have spare at the end of the month. The cautious consumer still exists – and a third (32%) of Brits claim they will save any extra cash they are have left over. Meanwhile, a quarter (24%) will use it on going out (spending on the cinema etc) and the same number (24%) will use it on dining out. Books/DVDs and CDs (22%) are next on the list of priorities, while a fifth (20%) will spend on small extras for the family. Slightly less (17%) will spend on clothing and personal items, while a long holiday (16%) has the slight edge on a short break (15%). Consumers have cut back most on leisure and that’s what they most want to spend on now. Retail will benefit from an upturn, but leisure stands to gain much more.”

So what about Christmas?

“It was a good Christmas. The comparison was with a very strong December in 2011 and yet retailers still saw growth in both value and volume. In fact many were pleasantly surprised and were short of stock for the Sales. Our research looking at the consumer and Christmas shopping also finds some evidence that consumers were a little less cautious than last year. More than a quarter (28%) of consumers made a list and stuck to it compared to 32% in 2011, while less people had a budget and kept to it – 24% compared to 27% in 2011. But it’s a myth that a lot of people go into debt over Christmas and then struggle to pay it back in the New Year. Only 7% admitted to that for 2012 – the same number as in 2011.”

..and online buying?

“Almost eight in ten (78%) consumers bought some presents online, but approaching half of those bought most of their presents online. That’s a big increase – as recently as 2007 only half of internet users bought any gifts online at all.”

“In 2012, people started to use their tablets and smartphones for gift buying – 9% and 6% respectively said they had bought at least some gifts on those devices. Meanwhile, 5% said they had used one store’s Wi-Fi to research another store’s offer. This is not necessarily just to check prices, it could just as easily be products or styles. Only 44% of people used the Internet to check prices and the better informed consumers are about prices, the more there will be a trend to price uniformity and price will come out of the equation.”

“Data from retailers indicates that the multichannel retailers saw the fastest online growth last Christmas. Only 23% of our sample actually bought online from a store based retailer, but Mintel expects this to grow in future years, especially as click and collect (used by only 16%) becomes more popular.”