Republic chairman Andy Bond

Republic chairman Andy Bond

UK retailers feeling weary after a sustained decline in consumer spending are now being told they face a "retail recession". So what are the key steps to survival? just-style's news editor Joe Ayling listened in on discussions at the first ever Retail London Conference earlier this week.

Clothing and footwear retailers in the UK may have to wait until the London 2012 Olympics before they truly recover from the recent recession, delegates at the Retail London Conference were told this week. While many shoppers were sheltered from the country's economic turmoil by falling prices, the opposite effect could take hold this year.

"In my view the retail recession is ahead of us," said Andy Bond, chairman of the Republic fashion chain. "2011 and 2012 in the UK are going to be very tough years for all of us who are exposed to the UK consumer economy. There will, of course, be winners and losers but the average position is one that concerns us all."

Nevertheless, a gloomy retail outlook is nothing new in recent years, and has actually benefited some value retailers. Furthermore, the insatiable growth of multi-channel retailing is creating a rush towards e and m-commerce to maximise sales.

"Mood of retrenchment"
Bond, who is the former boss of Wal-Mart's UK supermarket chain Asda, says that a worsening "state of wallet" and "state of mind" among shoppers is hitting consumption in the UK.

He adds: "The state of people's wallets is in a tough state and that's because wage growth is very muted and at the same time inflation is quite rampant at the moment. Whether it be petrol prices, food inflation, clothing inflation, people have got much less to spend.

"It's equally important to consider people's state of mind though. As we look back at the period that was called the recession, consumer spending held up remarkably well. If you were in a job you actually had more money to spend and you were feeling really quite confident and people kept spending.

"Now, not only is disposable income down but I think people's mood is one of retrenchment. We all hear through the newspapers about negative concerns about the economy, public spending cuts and unemployment, and also a political state around the world that's concerning everybody. Not only do people now have less to spend, but what they have they don't want to spend."

Reasons for optimism
Former Tesco CEO Terry Leahy is more optimistic about recovery in the second half of the year. Speaking at the sidelines of the Retail London Conference, he said: "I think that when you see some stability in oil prices you'll see a much stronger consumer recovery. For most people, just filling up the car is a huge amount of their weekly budget."

Meanwhile, Howard Saunders, founder and creative director of Echochamber, says recessions can be a good thing for retailers. "People say 'I'm going to hold onto my money really tight and reward those retailers who deserve it," he says.

Saunders adds that some value retailers have been "printing money in times of recession", including H&M, Zara and Forever 21. Many have used it as a chance to modernise their stores, he says, tailoring to a future consumer trend of "push for posh".

Multi-channel retail is another sector bucking the trend, with Tony Stockil, the founder of online consultant Javelin Group, telling Retail London that 14% of UK retail would be online by 2014, up from 8% currently.

He says: "A customer isn't just coming to a website to buy a product, they are also coming online to find out about a product. A clothing customer is coming onto a website looking for information as well as a transaction."

However, the rise of multi-channel in the UK will come at the expense of bricks and mortar growth according to Javelin, which predicts 25% fewer high street stores by 2020. "What are we going to do with all this empty space?" Stockil asks. "The truth is I don't know."

The UK retail market therefore appears to be staring down the barrel of a gun once again, and research conducted by Nielson for the Retail London event revealed that 57% of businesses expected deterioration this year.

That said, with recent proof that shoppers like to spend through a downturn and the continued surge online, the UK's retail recession will not pass without at least some opportunity.