Brexit and Trump factors could affect confidence on high street
Consumer psychologist Henry Enos, of the University of South Wales, explains why uncertainties may see changes to the high street this year...
AFALL in consumer confidence could see changes to the way the high street operates in 2017 with the uncertainties of Brexit, a retail expert has concluded.
Figures recently published by the Welsh Retail Consortium (WRC) revealed that footfall in Wales fell by 1.4% year-on-year in November, despite the run-up to Christmas.
This figure was significantly below the three-month average growth rate of 0.7% and it is also below the 12-month average of -0.3%.
One reason for this is undoubtedly the rise of online shopping, which is frequently seen by consumers as a cheaper and more comfortable option than hitting the High Street.
Henry Enos, a consumer psychologist from the University of South Wales, said he believed that with the uncertainties surrounding Brexit and the election of Donald Trump to the US Presidency consumer confidence was at an all-time low.
He said: “There has been a fall in consumer confidence with all the unknowns – with Brexit we don’t know what it means, and with Trump we don’t know what it means – and interest rates are going up.
“That uncertainty might be reflected in consumer confidence. The High Street has to be more structured.
“With a fall in consumer confidence, with uncertainties in the environment, it has to be more structured and to differentiate.”
Mr Enos said the winners of the Christmas High Street battle were thosse who had their offers between “bricks and clicks” sorted and those whose online deliveries had increased in efficiency.
He added those who reported doing well over Christmas “will be a heavy indicator of who will do well” this year.
“Stores have to indicate their online offer, their distribution, and they have to give added value,” he said.
“The high street’s independent stores will do well but the middle ground has been too slow with their offers.
“Consumer confidence is low because of the environment and the shops themselves have to be more structured in their offers and they need to say what they are selling, what they are offering.
“What will survive are the top-end brands – those with clear offering and selling to their target market.
“The small independents have a chance but we need to worry about some of the mid-range supermarkets.”
Sara Jones, head of policy at the WRC, said high streets and town centres had a “great deal” to offer and there was good work being done to stimulate collaboration between the public and private sector.
She added: “The retail industry is Wales’ largest private sector employer and is playing a key role in supporting communities and services the length and breadth of the nation.
“However retailers are facing significant challenges over the next 12 months, with the cumulative burden of Government imposed costs expanding, such as the new Apprenticeship Levy and higher National Living Wage, and the lack of reform around the outdated business rates model creating huge cost pressures.
“Despite one in every eight shops being empty and resulting in many gap-toothed high streets in Wales, the devolved administration has indicated its intention to push the business rate multiplier up even higher from April, making it yet more expensive to trade on Welsh high streets.
“All this comes at a time of subdued consumer expenditure and post-Brexit uncertainty.
“As an industry we expect the year ahead to see accelerating changes in shopping habits with a further growth in online retailing.
“Retailers will develop better propositions and compete harder across an increasing range of business models.
“However, without a supportive business environment, the challenges will remain and we could potentially see increased shop closures, fewer jobs, and ultimately less tax receipts for government.
“Areas that are already economically fragile are likely to see the greatest impact of store closures and some of the people affected by changing roles will be those who may find it hardest to transition into new jobs that are created.”