UK retail and consumer leaders identify rising costs, changing consumer demands and EU referendum as biggest concerns

Published at 12:01 PM on 31 May 2016

News release

Date

31 May 2016

Contact

David Jetuah, Media Relations, PwC

Tel: 020 7212 1812

Mobile: 07531 439437

e-mail: [email protected]

Pages

2

 

UK retail and consumer leaders identify rising costs, changing consumer demands and EU referendum as biggest concerns

A snapshot of the views of the CEOs of leading UK retail and consumer companies identifies changes in consumer demands and the introduction of the National Living Wage as the two factors which will have the biggest impact on their organisations over the next 12 months.

The top five potential threats to the growth prospects of retail and consumer businesses are rising costs due to issues such as business rates and the National Living Wage, the impact of Brexit, over-regulation, cyber threats, and the speed of technological change, according to a survey of 37 CEOs of large grocers, fashion and home retailers employing nearly one million staff in total by PwC.

Retail and consumer CEOs appear to be more confident about the longer term prospects for their company’s revenue growth than they are for the year ahead. 94 percent say they are confident about growth over the next three years, compared to 83 percent over the next 12 months. This is broadly in line with the UK findings across all industries from PwC’s Annual Global CEO Survey, published in January.

Only 29 percent of respondents are confident about the prospects for the UK retail and consumer sector as a whole over the next six months, while 60 percent are optimistic about the outlook over the next three years.

According to the survey, retail CEOs believe a vote to ‘Remain’ in the EU would have the most positive impact on consumer confidence, followed by interest rates remaining at 0.5 percent, and continued rising employment. 57 percent of respondents say their growth plans depend on the UK remaining in the EU, while the other 43 percent say their growth plans are not at all dependent on staying in the EU.

In terms of the potential implications of a Brexit, currency impacts causing prices to rise or margins to be squeezed and the impact on imports from the EU are the top concerns of CEOs.

Madeleine Thomson, UK retail and consumer leader at PwC, said:

“Retail remains an industry in flux, with a business model that has ‘worked’ for decades being reshaped at speed. It is apparent that retailers are wrestling with two major factors over the next 12 months, implementing the National Living Wage and adapting to changes in consumer demand, as customers change how they buy, what they buy and where they buy.

“It isn’t easy. At the same time as weathering economic and political uncertainties, and grappling with the outcome of the EU referendum, retailers have to keep up with emerging trends, anticipate consumer needs, and manage across a wide range of different channels.

“Our analysis identifies four key themes - simplicity, trust, innovation, and the customer experience – that retail and consumer organisations must get right to give a solid foundation for growth in an intensely competitive industry.

 “UK retailers must continue to tread the fine line between ‘clicks’ versus ‘bricks’, as advances in mobile phone technology, online sales and deliveries alongside shop and collect services mean the focus continues to shift away from the traditional trip to the high street.”

Commenting on the impact of the National Living Wage, John Harding, Reward and Employment Partner at PwC, added:

“The National Living Wage will have a transformative effect on pay structures, especially coming on the back of other new employment costs such as the Apprenticeship Levy and additional reporting like the Gender Pay Gap. Retailers faced with tighter margins and large numbers of lower paid hourly paid employees will have a difficult juggling act to ensure costs remain manageable while maintaining the engagement of their employees. Thought should be given now to what the wider business model will look like in 2020, and how the leaders can transition their business over the next few years to deal with this new cost model.”

ENDS

Notes to editors:

  1. The survey was conducted between 13 May 2016 and 20 May 2016

About PwC

 

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

©2016 PwC. All rights reserved


Twitter
LinkedIn
Facebook
Google+

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

« Smart home technology - Internet of Things or Indifference to Things? - PwC survey | Homepage | CEOs increasingly concerned about threats and readiness to respond to crisis »

  • Contact us
  • +44 (0) 20 7213 1768

Specific and out of hours contacts