The Changes and Actual Strategies in the UK Retail Sector

The unemployment rate in the UK has increased to its highest level in 17 years, as a result, disposable incomes will remain flat in 2009 and consumption is forecasted to reduce by 1.2% in 2009 with credit being hard to get. (BBC News Report, 2008). The reduction in disposable income may impact negatively on the fashion retail market because people tend to curb spending on fashion items in favor of necessities such as food. On the positive side, however, it is also possible that with the increasing difficulties in obtaining credit, more people will be unable to purchase big-ticket items such as homes and will opt to spend their money on clothing and footwear instead.

In a restrictive economic environment, supermarkets marketing fashion apparel are likely to enjoy higher levels of customer support as compared to specialist fashion outlets. With rising costs of gas and less of disposable income, consumers are likely to target their purchases to a supermarket where all goods are offered under one roof. Specialist fashion retailers may be faced with rising costs in rent, etc added to which the costs of sourcing products from China are likely to increase which could further decrease the margins available to specialists. Since the U.K. economy has been declining throughout the last three successive financial quarters, the value of the pound has been falling, thereby giving rise to outsourcing exchanges with smaller margins of profit.In such an environment, there is likely to be an increasing squeeze on midmarket retailers, many of whom may be forced to exit the market, since they offer neither low price for competitiveness, neither do they offer special value for their brands. Howard’s decision model shows that consumer purchase behavior is a component of (a)brand recognition (b) attitude towards the brand and (c) confidence in judging the brand, all of which make up the buyer’s image of the brand.(Kent and Omar, 2003).