Retail is the sector where UK businesses are most likely to feel exposed to a series of threats to business growth in 2020.
With the demise of Mothercare, news of Sainsbury’s profits diving 90% and Marks & Spencer reporting a fresh slump in clothing sales, a research study commissioned by ThoughtWorks shows that 87% of retail business leaders say they are not prepared for the perceived threats to business continuity that may arise as a result of Brexit.
The new study surveyed more than 1,000 decision makers in the UK, reveals that retail businesses were most likely to be concerned about:
- changes to the import and export of goods and services to and from the EU countries after Brexit, including VAT and customs payments (36% vs. national average of 23%);
- the falling value of the pound (32% vs. national average of 24%);
- supply chain disruption and fulfilment (28% vs. national average of 20%).
Whilst concern over data safety and transfer were in line with businesses from other industry sectors (20%), retail was the sector where decision makers were the most worried about the risk posed by cyber-attacks and their preparedness to manage it (19%).
Whilst the fear of exposure to cyber-attack was greatest among retail decision makers, the ThoughtWorks research also identified retail as the sector where fewest business leaders believed they were fully utilising technology to their advantage – to win business, run efficient systems and attract the best people (35%). This lack of technology agility linked to business outlook for the year ahead; retail being the sector where business leaders were most likely to say that following Brexit they would downsize and lose business (10%).
Kevin Flynn, Director of Retail Strategy at ThoughtWorks commented: ‘‘Retail is being hit by a cocktail of macro-economic disruption at the moment. Technological change and issues such as urbanisation, climate change and an ageing population are fundamentally changing the sector – and the consumer’s terms of engagement with it.
“When all is said and done, now is not a time for retailers to tinker with ageing business models, it is time to be radical; the organisations that will succeed post-Brexit will be those organisations that marry ambition, deep customer understanding and smart technology to the benefit of the customer.
“While in the short term, Brexit is serving up a range of operational, regulatory and supply chain issues, the real issue here is one of a much broader disruption of the sector and a lack of overall business agility.
“Retailers that are using technology to their full advantage (for example: automation of core business processes, data driven buying and merchandising operations, personalised customer experiences) will see events such as Brexit as opportunities. Retailers that continue with inflexible ageing business models will struggle to survive.”