THERE will be more losses from the town centre and retailers will come under further pressure as a result of the economic climate – but the Island is in a good position to weather the storm.
Those were the key messages from economist Harvir Dhillon, author of the British Retail Consortium’s data and insight publications, who was the guest speaker at a Jersey Business event.
With his visit coming as shop owners gear up for what has traditionally been their most lucrative season, at a time of huge economic stress, Mr Dhillon urged retailers to look at their own cost management, as well as ensuring that they provide the best customer experience.
‘It’s highly likely that many businesses will be under severe pressure,’ he said. ‘Retail insolvencies have risen to their highest level since 2012 and the expectation is that these insolvencies will rise throughout 2023. The economic environment, sustained pressure on margins through not just input costs but also consumers with less disposable income, means many retail businesses that had flourished before may find it increasingly difficult into next year.’
Acknowledging that many consumers were facing pressures on their wallets from a combination of rising fuel and power prices, increased food costs, and rent and mortgage payments, he said that retailers needed to be ‘sensitive’ to those pressures. However, Mr Dhillon, who works with BRC members using data to identify local trends, said that Jersey was in a more positive situation than many areas of the UK.
‘I think Jersey benefits from the fact that its medium household income is considerably higher than the mainland,’ he said. ‘There are many affluent households here who will likely have some buffer and be better able to weather a cost-of-living storm. Also, trading hours in Jersey do shift and there is a real feel about the festive season here, so Jersey is well placed to have that footfall and some Christmas cheer.’
Adapting to the changing environment, particularly in relation to digital, was also critical for shop owners, said Mr Dhillon, who added that, before Covid, one in five sales took place online, but that the figure had now risen to one in four.
The permanent rise in online sales, he added, was likely to increase as more people became comfortable with buying that way.
‘Those retailers with a digital arm will be likely to absorb any economic shocks better,’ he said.
Despite the gloomy economic outlook, Mr Dhillon said history had proven that times of economic downturn also offered opportunities.
What was clear, he said, was that nobody expected the high street of Christmas 2023 to look the same as it does today. He urged retailers to look at data to help understand how to best position their own businesses to weather the storm, and to create a ‘shopping experience’ to entice customers.
Read the full interview with Harvir Dhillon on page 42.
