Published: 15 Oct 2010
Last Updated: 06 Nov 2012
There's a new kind of shopper in town - and retailers who don't take steps to accommodate them won't live to tell the tale, according to BDO. In a new report called 'Transitions to the new consumer', the accountancy makes the grim prediction that 26,500 retailers will go bust in the next five years. And it's not because we'll be spending less; it's because they're not adapting fast enough to post-recession conditions. A classic example of Schumpeter's creative destruction? Perhaps - but it won't help this supposed private sector-led recovery...
Despite the fact we're technically not in recession any more (at least for the time being), BDO reckons the next five years are still going to be pretty grim for some parts of the high street. Those 26,5000 retailers it's predicting will be shuttered equates to 0.9% of the total – ‘significantly higher’ than the 0.6% of retailers that were forced to close after the recession in the early 1990s - and apparently includes 15,400 fashion retailers, 6,300 bars and 1,500 furniture retailers. Closures will apparently peak next year, with a (suspiciously precise) 5,017 businesses forced to literally shut up shop.
At first glance, this seems to chime with Begbies Traynor's prediction earlier this week that the imminent public spending cuts will put 50,000 companies out of business. But according to BDO, it's consumers rather than cuts who will dictate which firms survive the coming few years. It argues that the post credit crunch shopper has a new ‘psychology’ - we're on the look-out for better value for money, increased quality, and a more personalised service. Retailers who adapt to this will survive and thrive; the rest will wither and die. ‘The recession has been a catalyst for change and people are becoming much more demanding,’ suggests Don Williams, who's head of BDO's retail division.
To some extent, this is just the way of the world in a free market economy; those companies that adapt best to market changes flourish, and those that don't fail. And the good news is that there should still be business out there: BDO reckons growth in retail spend will actually edge up next year, from 2.6% to 2.8%. However, the unfortunate corollary of all these insolvencies will be job losses - lots of them. Since the Government is hoping that the private sector will pick up the jobs slack after it unleashes a recession on the public sector, that can't be good news.
Despite the fact we're technically not in recession any more (at least for the time being), BDO reckons the next five years are still going to be pretty grim for some parts of the high street. Those 26,5000 retailers it's predicting will be shuttered equates to 0.9% of the total – ‘significantly higher’ than the 0.6% of retailers that were forced to close after the recession in the early 1990s - and apparently includes 15,400 fashion retailers, 6,300 bars and 1,500 furniture retailers. Closures will apparently peak next year, with a (suspiciously precise) 5,017 businesses forced to literally shut up shop.
At first glance, this seems to chime with Begbies Traynor's prediction earlier this week that the imminent public spending cuts will put 50,000 companies out of business. But according to BDO, it's consumers rather than cuts who will dictate which firms survive the coming few years. It argues that the post credit crunch shopper has a new ‘psychology’ - we're on the look-out for better value for money, increased quality, and a more personalised service. Retailers who adapt to this will survive and thrive; the rest will wither and die. ‘The recession has been a catalyst for change and people are becoming much more demanding,’ suggests Don Williams, who's head of BDO's retail division.
To some extent, this is just the way of the world in a free market economy; those companies that adapt best to market changes flourish, and those that don't fail. And the good news is that there should still be business out there: BDO reckons growth in retail spend will actually edge up next year, from 2.6% to 2.8%. However, the unfortunate corollary of all these insolvencies will be job losses - lots of them. Since the Government is hoping that the private sector will pick up the jobs slack after it unleashes a recession on the public sector, that can't be good news.
