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Retailers should brace for 2009 as worst year on record - Verdict Research
09 Dec '08
5 min read
Six years of negative growth will take their toll on high street sales which will decline by 17.6bn from £157.5bn in 2008 to £139.9bn by 2013. “With such dire a dire outlook for the high street, it is inevitable that more retailers will go under” says James Flower, Senior Consultant at Verdict.
“The length and depth of the retail downturn will test even the strongest of retailers and some will not last the course – at least not in their present form.”
Profit freefall:
Verdict warns that the tough trading conditions are likely to wipe billions of pounds from retail profits in 2009. With the cost of running a retail business going up by 4-5% a year and demand falling, many retailers will find their margins and profits severely squeezed.
Verdict estimates that over the course of 2009 as much as £3.6bn of retail profits could be wiped out and the average operating margin could fall 3.8 percentage points to just 2.8%.
“2009 will be a lean year for most retailers” says Saunders. “With incredibly thin margins in most sectors, many are already taking a hit with the deep discounts they're offering: that situation will only worsen in 2009.”
Managing the risks:
In an economic climate such as the recession into which we have now been thrust it is deemed logical to bolster defences. It may be that, as the old adage suggests, attack will prove to be the best means of defence
ActiveResilience provides tried and tested processes to aid management to manage future uncertainty and strategic risks that threaten the viability of organisations.
And there is some really good news too – if this is done then you will not only actively defend yourselves but you may well reap a huge benefit. The process reveals opportunities equally as well as it reveals risks and threats – and before your competition sees them.
“The length and depth of the retail downturn will test even the strongest of retailers and some will not last the course – at least not in their present form.”
Profit freefall:
Verdict warns that the tough trading conditions are likely to wipe billions of pounds from retail profits in 2009. With the cost of running a retail business going up by 4-5% a year and demand falling, many retailers will find their margins and profits severely squeezed.
Verdict estimates that over the course of 2009 as much as £3.6bn of retail profits could be wiped out and the average operating margin could fall 3.8 percentage points to just 2.8%.
“2009 will be a lean year for most retailers” says Saunders. “With incredibly thin margins in most sectors, many are already taking a hit with the deep discounts they're offering: that situation will only worsen in 2009.”
Managing the risks:
In an economic climate such as the recession into which we have now been thrust it is deemed logical to bolster defences. It may be that, as the old adage suggests, attack will prove to be the best means of defence
ActiveResilience provides tried and tested processes to aid management to manage future uncertainty and strategic risks that threaten the viability of organisations.
And there is some really good news too – if this is done then you will not only actively defend yourselves but you may well reap a huge benefit. The process reveals opportunities equally as well as it reveals risks and threats – and before your competition sees them.
Verdict Research
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