Critically Evaluate The Impact Of The Gloabal Recession On The Licensed Retail Industry In The Uk

Read Complete Research Material

CRITICALLY EVALUATE THE IMPACT OF THE GLOABAL RECESSION ON THE LICENSED RETAIL INDUSTRY IN THE UK

Global Recession on UK Licensed Retail Industry

Global Recession on UK Licensed Retail Industry

Introduction

The current economic downturn, rising unemployment and predicted public spending cuts mean that consumer confidence has fallen dramatically, causing a significant reduction in consumer spending. However, whilst few retailers are immune to the effects of this reduced consumption, there are significant variations in how different retail markets are faring in the downturn so far. The recession has shifted consumer demand towards both quality and value, placing pressure on the middle market offer. Consequently, mid-price retailers have suffered from falling sales, whereas supermarket retailers, with their growing market share of non-food items, and discount stores are performing well. In addition, differing consumer trends across European countries will result in a diverse impact from the recession. Over recent years, consumer spending in South-eastern Europe has been driven by significant levels of consumer debt. In contrast, consumers in Central Europe have taken a more conservative approach to spending. The severe decline in the flow of credit and the availability of cheap loans, resulting from the economic downturn, will have a much greater impact on retail sales in South-eastern Europe due to a sharper reduction in consumer spending.

The retail sector is showing signs of gearing up in 2010 as evident from recent survey results. According to a recent survey by Datamonitor, the percent of respondents cutting back on non-essential expenses has declined sequentially since May 2009 in both the United Arab Emirates and Saudi Arabia. Moreover, number of shopping trips by individuals has increased during the same period in the region. Furthermore, consumer confidence in the United Arab Emirates jumped from 29.6 points in 2H 2009 to 86.1 points for 1H 2010. Prior to this, in 2009, the GCC retail market was adversely impacted by the economic downturn albeit less severely compared with the United States and other developed markets. However, the industry environment proved to be better after the particularly severe 2008. The additional GLA available in 2009 across the GCC was significantly higher than that in 2008. In terms of key cities, Abu Dhabi and Dubai recorded the highest GLA addition during 2009.

European Retail Focus

While the recession presents a short term threat for the retail sector, the ageing of our population offers a similar threat in terms of consumer spending, but over a much longer time scale. Population projections from the European Commission show the number of people aged 65 years or over rising from 84.6 million in 2008 to 151.5 million in 2060. This demographic transition is the result of both a reduction in fertility rates (in every European country these are below replacement levels) and increasing life expectancy. In the last decade, many European countries relied on immigrants to fill job vacancies, both skilled and unskilled; however, the global recession has resulted in many newcomers returning to their countries of origin (Forfás, 2006). The ageing of our population, combined with a decrease in the ...
Related Ads