The dominance of retail on high streets is something of the past. Whilst shopping will still be a key feature, there is greater demand and opportunity for restaurants and leisure activities, as well as for more public services, such as health centres and libraries, in town centres, points out a recent report by House of Lords.
The Built Environment Committee's report, "High Streets: Life beyond retail?", published today (28), sets out how high streets can be regenerated and become more resilient, emphasising that retail will remain vital but must be part of a broader mix including leisure, services and community spaces.
The committee found that local authorities often lack adequate resources and skills to support high streets, recommending investment in training town centre managers and highlighting the need for greater coordination between Government departments.
The report states that what communities want and what can be sustained on the high street is constantly evolving, so a fixed vision and monolithic approach to their future should be avoided. Local authorities, communities and businesses need to work together to shape high streets that are reflective of local conditions, adaptable, and resilient.
High streets will only thrive if people can get to them easily and safely. Access by car and sufficient parking are necessary for commercial sustainability, though their adverse consequences can be mitigated by better public transport connectivity, particularly through improved bus networks, states the report.
As retail occupancy declines and leaves behind vacant units, cafés and restaurants have taken their place. There has also been a rise in the number of charity shops, which benefit from substantial business rates relief and often have lower staff costs, making them more able to afford high street rents. Public authorities are also tentatively moving public-facing services (such as surgeries and libraries) on to high streets. This can both improve access to those civic functions and increase footfall to sustain local businesses, states the report.
Leading trade association British Independent Retailers Association (Bira) has welcomed a major new report from the House of Lords that calls for empowered local leadership and simplified funding to help revive Britain's high streets.
"People, particularly young people, value having space to socialise and spend time without spending money on the high street. They also value green spaces on or near the high street. More green space and an improved public realm should be a key consideration in proposed regeneration programmes.
"Local authorities and the Government create the structures for high street renewal. The planning system, taxation and funding can all impact the success or failure of projects to revive local places. But, the previous Government's plans to revive high streets were not well co-ordinated.
"The new Government's local growth funding reforms must ensure that high streets are enabled to flourish in the long term, and that those responsible for their future have enough expertise to deliver improvements. The Government should recognise that local authority bidding for central funding has become expensive and wasteful and should consider replacing that approach with a transparent system of funding distribution that commands greater confidence," states the report.
Commenting on the report, Andrew Goodacre, CEO of Bira, which represents 6,000 independent retailers across the UK, said, "This report has identified some of the key elements to a successful high street, whilst recognising that each place needs to find its identity and solution to create a vibrant high street.
"For some time Bira has been saying that retail is no longer the dominant feature of high streets, with consumers looking for more services and leisure opportunities. We also agree with the conclusion that high streets need diversity and adaptability, - characteristics often delivered by independent retailers and independent business in general.
"It is also good to see recognition of the need for good accessibility by investing in infrastructure where possible and highlighting the importance of good car parking.
"Finally, we absolutely support the idea of local business leaders and local communities being involved with future plans to regenerate a place. Funding can also then be devolved to a local level, supporting coherent plans. Independent retailer care about their high street and the their communities, and all too often their voice can be ignored," he added.
The report urges the Government to provide local authorities with more targeted support and calls for a radical simplification of the current funding landscape, which it describes as "patchy and uncoordinated."
It also emphasises the importance of providing resource funding alongside capital investment to ensure sustainable regeneration.
Britons are splurging this Christmas on their pets with a huge spike seen in the demand of pet food, treats and toys. show multiple reports across the industry.
Brits' love for their pets can be seen in the recent trends. Sales of Christmas pet lines are up 964 per cent year-on-year at Waitrose online. The food ranges have had some of the biggest increases. Visits to the Waitrose online mince pies for dogs page have risen by 351 per cent in last 30 days.
At John Lewis, sales of seasonal themed dog toys have increased 98 per cent compared with this time last year.
According to Emma Clifford, associate director of food and drink research at Mintel, this trend can, in part, be put down to the trend of pet humanisation.
“The ongoing ‘humanisation of pets’ means pets are increasingly seen as family members, and stress relievers – with many owners willing to spend more on their pets’ care,” The Guardian quoted Clifford as saying.
“We’re known as a nation of pet lovers … nearly three-quarters (73 per cent) of pet owners who use and buy household care products say that looking after their pet’s health is more important than keeping their homes clean."
In 2023, a survey found that 18 per cent of Britons planned to spend more on their pet at Christmas than on their significant other. Meanwhile, research by Mintel found that more than half (56 per cent) of pet owners would rather cut back on money spent on themselves than on their pets.
Industry reports state that the majority of owners spend about £26–£50 on their pets per month while the UK spends £10 billion a year on their pet dogs. 58 per cent of owners buy birthday and Christmas presents for their pets.
Families are set to splash out on Christmas this year as expected spending hits a three year high as the cost-of-living pressure eases, according to RSM UK’s latest Consumer Outlook.
Families expect to spend an average of £760 on Christmas this year, up £158 or 26 per cent on £602 last year; and £694 in 2022. Last year consumers spent on average around a third more than expected, so 2024 average spend could break the £1,000 mark if the same overspend happens again this year.
A third of families (33%) plan on using some form of credit, including a credit card, buy now pay later arrangements, a loan or using overdraft, to fund Christmas this year. Half of all families (50%) plan on bringing forward their Christmas spending to spread the cost of purchases and take advantage of discounts such as Black Friday and Cyber Monday.
The EY Holiday Shopping Survey has also found that the consumers have started their holiday shopping earlier this year, driven by a desire to spread out their spending.
The top three categories that families plan on spending more on include Christmas presents (33%), Christmas dinner (33%) and food and drink at home (32%). Whereas the biggest cutbacks will be homeware (42%), eating and drinking out (40%) and adult fashion (37%).
“Expected Christmas spending hitting a three year high will be welcome news to retailers as families look set to splurge on Christmas presents and food and drink at home. Consumer confidence improved for the first time in three months in November, but it remains fragile and any further dips in confidence could derail expected spending,” Jacqui Baker, partner and head of retail at RSM UK, commented.
“Many retailers will be hoping that Black Friday deals can kickstart sales throughout the Golden Quarter to ensure they are in the best possible financial position going into 2025 to help offset the looming uplift in costs post-budget.”
With the UK food market expected to contribute £19.3 billion in sales to the UK food and grocery sector by 2028, product differentiation will be key to thrive in this competitive landscape, says a leading data and analytics company.
UK grocers must move beyond competing solely on price and prioritize innovation in their product offerings to attract a growing base of transient shoppers. Developing unique and diverse food ranges is essential to drive long-term growth and customer loyalty.
Eleanor Simpson-Gould, Senior Retail Analyst at GlobalData, comments, “A saturation of loyalty schemes and price matching promotions by UK grocers is fuelling consumer switching behavior. The competition regarding pricing, product variety, and quality has intensified to a point where UK consumers are willing to visit several grocers for weekly food shops to get the best deals.
“Though discounts and promotions are a strong driver of food and grocery purchases for UK consumers, quality and range perceptions must underpin product development strategies as price concerns ease. These factors offer a more significant point of differentiation in this highly competitive market.”
GlobalData’s How Britain Shops Survey reveals that the proportion of UK consumers who stated that branded products are appealing to them in the food and grocery market is significantly lower (50.7 per cent) than that compared to range (87.3 per cent) value for money (81.1 per cent). The low priority of branded goods and high priority of range and value for money drivers is favorable for grocers and indicates a strong preference for private-label ranges.
Simpson-Gould continues, “Grocers must invest in private-label ranges to secure a clear differentiation from competitors, improve impulse spending opportunities and bolster volume growth. A strong private-label offer must include world food options, fresh bakery products, broad ready-meal ranges, snacking and food-to-go items.
"Tesco’s Finest range innovation in 2024, consisting of new summer picnic items and meal deal options, is an excellent example of successful private-label differentiation.”
While core categories, food, soft drinks and hot drinks, will achieve robust growth between 2023 and 2028, alcoholic beverages and tobacco and e-cigarette markets are forecast to underperform significantly.
GlobalData estimates that the tobacco and e-cigarette market will decline at a CAGR of 0.4 per cent between 2023 and 2028, lower than the alcohol market, which is set to achieve a moderate CAGR of 1.6 per cent in the same period.
Ahead of the disposable vape ban in 2025, grocers must ensure alternatives such as e-liquids and refillable tanks are available for consumers looking to switch smoking methods. To combat slowing alcohol sales, grocers should reduce ranges of high-sugar, low-spirit level alco-pops, typically favored by younger demographics and expand their propositions of sugar-free alternative soft drinks, energy drinks and non-alcoholic mixer ranges.
Simpson-Gould conlcudes, “Heightened health concerns, changing social attitudes and government initiatives will inhibit growth in the tobacco and e-cigarette and alcohol markets. Both markets will account for a smaller proportion of the total UK food and grocery sector by 2028, making these categories undesirable areas for product development.”
Shoppers’ ability to afford Christmas treats has been put under threat as retailers warned November could mark a turning point for inflation, with the recent fall in prices slowing amid increased fresh produce costs and fewer discounts on the shelves.
According to figures released by British Retail Consortium (BRC) today (26), shop price deflation was at 0.6 per cent in November, up from deflation of 0.8 per cent in the previous month. This is slightly above the 3-month average rate of -0.7 per cent. Shop price annual growth remained its lowest rate since September 2021.
Food inflation slowed to 1.8 per cent in November, down from 1.9 per cent in October. This is below the 3-month average rate of 2.0 per cent. The annual rate continues to ease in this category and inflation remained at its lowest rate since November 2021.
Fresh Food inflation accelerated in November, to 1.2 per cent, up from 1.0 per cent in October. This is in line with the 3-month average rate of 1.2 per cent. Inflation was its lowest since November 2021.
Ambient Food inflation decelerated to 2.7 per cent in November, down from 3.1 per cent in October. This is below the 3-month average rate of 3.0 per cent and remained at its lowest since February 2022.
Helen Dickinson, Chief Executive of the BRC, said, “November was the first time in 17 months that shop price inflation has been higher than the previous month, albeit remaining overall in negative territory. Food prices increased for fresh products such as seafood, which is more vulnerable to high import and processing costs, especially during winter.
"Tea prices also remained high as poor harvests in key producing regions continued to impact supply. While coffee prices experienced a momentary dip, price rises are imminent as global coffee prices approach record highs. In non-food, while many retailers unwound some of their discounting, there are still many bargains across fashion and furniture.
"Customers looking to upgrade their electricals were able to pick up some great deals in early Black Friday sales. With significant price pressures on the horizon, November’s figures may signal the end of falling inflation.
"The industry faces £7 billion of additional costs in 2025 because of changes to Employers’ National Insurance Contributions, business rates, an increase to the minimum wage and a new packaging levy.
"Retail already operates on slim margins, so these new costs will inevitably lead to higher prices. If the government wants to prevent this, it must reconsider the existing timelines for the new packaging levy, while ensuring any changes to business rates offer a meaningful reduction for all retailers as early as possible.”
Mike Watkins, Head of Retailer and Business Insight, NielsenIQ, said: “Shoppers are still being cautious by shopping savvy for the essentials and holding back their discretionary spend, so the lower level of inflation should help sentiment ahead of Black Friday promotions. And with lower inflation than this time last year, many food retailers are extending offers and discounts to help sales momentum in December.”
The Centre for Economics and Business Research (CEBR), which produces the tracker for the supermarket, predicted that households will face “dampened spending power over the festive period”. It said the rising cost of essentials would be particularly concerning for households on lower incomes.
Rising inflation may subdue household spending this Christmas according to the latest figures from Asda’s Income Tracker.
The tracker, which measures household disposable income, fell for only the second time this year, decreasing by £1.98 in October, leaving the average UK household with £247 per week. The 2.3 per cent rise in inflation was primarily driven by higher energy prices, reflecting the rise in the Ofgem price cap that took place at the start of the month and caused housing, water, electricity, and gas bills to increase.
It has led CEBR, who produce the Income Tracker on behalf of Asda, to predict that households will face “dampened spending power over the festive period”. The rising cost of essential spending will be particularly concerning for households on lower incomes heading into Christmas.
These households saw the slowest growth in disposable income since January this year at just 1.6 per cent. Consequently, their net income does not cover the cost of bills and essential spending – leaving them with an average weekly shortfall of £69.
Across age groups, those aged 30 to 49 experienced the fastest annual rise in the cost of essential spending, which increased by 3.8 per cent to £765 in October. These households, often made up of younger families with children, face significant essential expenses, including childcare costs.
The rise in essential spending also saw these households record the weakest growth of any age group with their disposable income only increasing at 5.5 per cent to £298 per week in October – their weakest growth since January. Cebr expects the inflation rate is expected to remain above target for the rest of the year.
Sam Miley, Managing Economist and Forecasting Lead at Cebr, said, “October’s reading was only the second time this year that the Income Tracker reading has fallen on the month.”
“This was largely expected, given the increase in the Ofgem price cap that took place at the start of the month, bringing higher energy bills. These increased energy prices will persist over the rest of Q4, leading to slightly dampened spending power over the festive period.”