UK Retail in Review – January/February: Recession is Here, What to Expect?

Time flies, and though it might feel like yesterday retailers were planning their strategies for the 2023 holiday season, the first two months of 2024 have already passed by in the blink of an eye. As we navigate through the beginning of the year, several UK retailers face challenges while many show significant signs of growth.

In our latest Retail in Review blog, we take a look at how UK brands are navigating through the initial two months of 2024 in the retail industry.

People in Focus: UK’s Noteworthy Retail Appointments

At the beginning of the year, the UK retail panorama witnessed a number of people moves and appointments, from C-level to Director-level. John Lewis appointed former fashion boss Peter Ruis to lead the department store chain and Pets at Home hired former Sainsbury’s exec Anja Madsen as its new COO for retail. Former Poundland Finance Director Dave Williams was also in the limelight as he joined Matalan as its new CFO, replacing Stephen Hill, who stepped down after 23 years with the company. These changes at the C-level only underscore the role of dynamic leadership in driving growth.

With digital expertise becoming more important to brands, the last couple of months saw retailers leveraging talent acquisition to strengthen their digital capabilities and stay competitive in the online space. Dunelm strengthened its boardroom’s digital expertise, bringing in ex-Amazon director Ajay Kavan and Daniel Taylor, the CEO of Paddy Power owner Flutter, whereas Asos named Anthony Ben Sadoun as its new Executive Vice President of digital products. It is clear that technology is vital, but human expertise also plays a critical role in the success of customers’ digital journeys.

Navigating Challenging Times 

While the industry saw several hirings at leadership levels, a number of brands announced their plans to reduce workforces and shut down stores. The Body Shop announced that it will be closing half of its 198 stores in the UK and cutting the size of its head office, leading to hundreds of job losses. Farfetch is also set to cut up to 30% of its total workforce as global e-commerce retailer Coupang takes ownership. Meanwhile, John Lewis is reportedly considering 11,000 job cuts as part of a major turnaround. These workforce reductions only reflect the challenging times being faced by global retailers. Amidst this challenging landscape, the UK entered a technical recession.

To effectively deal with these challenges and increase sales, retailers need to deliver high value for money. From competitive pricing and loyalty programmes to top-tier and exclusive customer service, brands need to make sure they create their unique competitive edge. To better understand customers and stand out, brands need to take a holistic approach to their retail technology. British retailers can take inspiration from US markets. Reiss recently deployed Mobile Point-of-Sale (POS) technology in its US stores to streamline in-store operations and deliver top-tier customer experiences. By using technology to deliver unparalleled customer experiences, retailers can increase sales opportunities.

Growth Continues

While some brands made job cuts, many others experienced significant growth, indicating consumer confidence despite economic fluctuations. According to the latest Office for National Statistics (ONS) report, January witnessed the largest monthly sales rise since April 2021, as retail value sales grew 3.9% after a record fall in December 2023. This rebound in sales reflects a potential recovery in the retail market. 

A number of brands in the UK seemed to have a great start to 2024. Pandora’s revenue hit £1.2bn and the brand announced 5% growth in its European market, demonstrating adaptability in the competitive landscape. Meanwhile, Shoe Zone announced that its profits had surged almost 20%. As a result, the retailer is expecting to open 25 new shops in 2024 and complete a “minimum of 25 store” refits. This reflects the retailer’s strategic approach to meeting evolving consumer demands.

Primark is set to invest a further £75 million into its UK store estate this year, taking its total investment to more than £100 million in its UK stores in 2024. As a result, the retailer will create 700 new jobs as it marks its 50th anniversary on British high streets. Primark’s continued investments in the UK market signal confidence in future prospects.

Looking ahead

While the recession news created uncertainty within the market, the UK retail landscape shows promising signs of growth. Although consumers are resilient, they have also become more demanding and fastidious about their purchasing decisions. Retailers who are agile and continue to meet evolving consumer expectations are likely to thrive in the industry.

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