Retailers face a tough year of it in 2024, as existing cost pressures risk being worsened with tax hikes against a backdrop of declining footfall, analysts have said.
British Retail Consortium figures on Friday showed a 2.2% drop in footfall across UK shops over the course of December.
This meant footfall declined by 2.5% over the three months to December, or the Golden Quarter, and by 2.2% in 2024.
Hargreaves Lansdown analyst Susannah Streeter noted the picture may have been “even bleaker” were it not for the key Christmas shopping period.
She highlighted commentary from the BRC pointing to a shift in consumer trends away from high streets and shopping centres to retail parks, where the likes of free parking and wider variety of “things to do” was said to have attracted numbers.
“It looks set to be a highly challenging year ahead for retailers who will be faced with the double whammy of shoppers increasingly focused on getting value for money, while their own costs rise due to the increase in employer National Insurance taxes,” Streeter said.
Sensormatic retail consultant Andy Sumpter echoed the view, warning firms would have to “look afresh” and “adopt innovative strategies” to win back shoppers.
“Retailers will be nervous about passing on extra costs to the customer, but they won’t want to stomach lower profit margins if possible,” AJ Bell’s Russ Mould added.
“There is a heightened risk of profit warnings from the retail sector over the coming weeks as management teams take a more realistic view of the year ahead.”