The latest Deloitte Consumer Tracker showed the outlook for consumer activity in the UK in 2016 remains largely positive with low inflation, low interest rates, rising wages and declining unemployment supporting consumer spending power. The UK consumer has so far shrugged off global issues such as the slowdown in China, the falling price of oil and an interest rate rise in the US. As a result, sentiment in the real estate sector towards the general occupier market is positive and it is anticipated that rental growth will be a big contributor of performance in 2016.
Deloitte Consumer Tracker Q4 2015
However, whilst rental value growth picked up pace in 2015 across most market sectors, retail property rental growth has lagged behind. Deloitte has recently published a report that goes some way in explaining this.
The Deloitte Consumer Product Trends report explores five undercurrents that may affect the consumer product industry in 2020. These will all impact on the occupier market with retailers who successfully capitalise on the opportunities created by the changing patterns of demand in the global marketplace succeeding, whilst other retailers may fall away.
For example, the pervasive digitisation of the path to purchase is affecting traditional brick-and-mortar business models which may be dismantled further as consumers fully embrace digital. This echoes the Deloitte Shed of the Future report which noted that E-commerce and technology has offered a level of convenience and service that is now taken for granted and has become an increasingly complex process for retailers. Additionally, proliferation of customisation and personalisation adds further complexity to the supply chain.
How well retailers understand and navigate these processes will determine their success in the sector. The complicated path to success for retailers is contributing to the weaker rental growth being widely reported in the market, despite the promising economic outlook for the consumer sector.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
