Is retail about to surge?


With the clocks changing and the days getting longer, there becomes a tangible shift in the mood of the nation. Typically that translates into a pick-up in activity for retailers. Indeed, Since 2021, the only time that Q2 performed worse than Q1 was last year, equally, that did coincide with the sharp downturn in the economy caused by quantitative tightening, which instantly acted to squeeze the economy. Combine that with the fact inflation is coming down, salaries are picking up and the economy is growing again and with that, we are forecasting consumer goods & services, along with retail specifically to be the biggest beneficiaries. The first quarter of the year already saw a significant uptick in activity compared to last year. Indeed, the first three months of 2024 outperformed the period of April – December last year.

A key aspect of this, has been the move by retailers to shift vacancies where possible from London to the regions. Indeed, in a special report prepared by Vacancysoft for Bloomberg, we found that when comparing the pre-pandemic period to now, Consumer Goods and Services has seen the biggest shift of HQ vacancies from London to the regions. According to Parliamentary research, London already has the lowest proportion of retail employment nationally, in contrast the northern regions have the highest. In part this can be attributed to the London economy being so strong in other areas, equally the trend is visible.

E-commerce is also a significant contributor to this. As shopping preferences shift, the needs for bricks and mortor locations in central cities is becoming less important. Shopping habits are changing. People are more inclined to buy over an app, and return what they don’t want. This is meaning that for businesses looking at how they can price competitively, what is critical actually is getting their logistics costs down. Hence the region which has seen the biggest growth is actually the midlands, due to its geographic advantage. As the trend towards e-commerce accelerates, we anticipate this to continue. As an example, with VR, instead of having to go on an application and try to work out what you want, you could browse a virtual store, and pick out your preferred item, where the chance of your size being out of stock is minimized.

If there is a fly in the ointment, it is the fact that VAT sales on luxury goods are dampening retail tourism. Hence while the Government has at this time made no commitment to reverse those changes, we expect this to happen in due course. The proximity of the Capitals of the continent combined with the ease of travel across Europe means that for many tourists visiting from afar, to stop through say London and Paris for a few days each, where they shop in France at the end of their stay just makes sense. Indeed, in contrast to the British Government, the French have gone out of their way to make it easy for people visiting to buy goods and claim the VAT back. With that, US tourists for example, are now spending more than triple the amount on VAT-free goods in France and Spain as they were before the pandemic in 2019. On top of that, GCC tourists visiting Britain spent 35% less in 2022 than they did pre-pandemic, but spent 66% more while visiting Italy. As a result, the clamor for this policy to reverse is therefore growing, so when it does, expect luxury goods sales in London to surge.

The data referenced above has been sourced from Vacancy Analytics, a cutting-edge Business Intelligence tool that tracks recruitment industry trends and identifies emerging hotspots. With 17 years of experience, we have a deep understanding of market activities in the UK and globally.

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