UK retail profits to fall by £8 billion, new research shows

Foreign media reported that a recent new study found that by 2025, UK retail profits are expected to decrease by £8 billion.

A recent report released by global professional services firm Alvarez & Marsal (A&M) in collaboration with Retail Economics said this may be the result of people turning more to online retail in the wake of the COVID-19 pandemic.

Pre-tax profit margins are expected to fall to 3.2% by 2025, and even in the absence of the COVID-19 pandemic , UK consumer behavior would remain on the same trajectory, with pre-tax profit margins falling to 3.7%.

The lasting impact of COVID-19 will not affect all retail categories equally, with some businesses more vulnerable to margin pressure than others. Nearly 20% of spending on apparel, home furnishings and appliances is expected to permanently shift online .

Retailers with stores in the UK will feel the changes most, with 40% of consumers saying their shopping habits will change permanently – the highest proportion in Europe.

“Covid-19 has brought about irreversible changes that have left the future of many retailers hanging in the balance,” said Richard Fleming, managing director of A&M.

“ The businesses that remain relevant and survive the disruption will be those that are able to recalibrate their operating models to adapt to the new normal and meet the needs of post-pandemic consumers , but those that fail to do so will not make it out of this difficult time . ”

Currently, the UK retail industry is recovering from the epidemic, and the foot traffic of physical retail is increasing slightly. The latest research shows that the foot traffic of UK retail was flat last week, with a slight decrease of 0.2%. According to Springboard data, the foot traffic of high streets and shopping malls increased by 0.2% and 0.6% respectively, but the foot traffic of retail parks decreased by 2%.

However, recently, the epidemic situation in the UK has once again faced a severe situation, with a surge in the number of infections and the lifting of the blockade will continue to be delayed. This will be a new blow to physical retail, while online retail may usher in new growth opportunities and consumers may continue to shop online in large quantities.

U.K.

retail

profit