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Two new surveys reveal worrying times ahead for retail

Retailers are increasingly worried about the prospects for recovery according to a new survey released this week that showed nearly half of UK retail businesses expect it to be at least two years before a full economic recovery happens.

The results also showed that 45 per cent said their businesses would struggle to survive if the current climate continues for another twelve months.

Worrying times ahead for retail

The combination of nervous customers and price hikes is hitting retailers hard with 67 per cent of those retailers questioned for the survey by business insurance specialists QBE saying they were facing the negative consequences of rises in commodity prices with the fluctuating costs of fuel, gas and electricity the most difficult to control.

Additionally more than half of all respondents to the survey said they were facing a double whammy of competitors slashing prices at the same time as costs are rising.

Employment in the retail sector is being hit hard this year with only 16 per cent planning to hire staff this year according to the survey.

The disappointing employment figures were supported with the latest release this week of the BRC-Bond Pearce Retail Employment Monitor which showed that in the second quarter of 2011 retail employment was down by 0.4 per cent compared to the same quarter a year earlier.

The figure is equivalent to 3,100 fewer full time jobs despite the number of retail outlets growing by 4.5 per cent, or 743 stores, in the period. More worrying is that for the next quarter 58 per cent of the respondents said they would keep staffing levels unchanged in the next three months while a quarter said they would cut staffing levels – compared with 8 per cent for the same time last year.

Stephen Robertson, British Retail Consortium Director General, said: "Most retailers continue to hold steady and almost one in five still expects to increase jobs, but a growing number are having to limit hours and reduce staff - leaving overall retail employment down on a year ago.”

However, the QBE survey did reveal some positive results with 60 per cent of businesses in the retail sector saying they had become more efficient as a result with over half saying they had improved their general management skills and were more competitive as the result of having to compete through a recession.

It also revealed that many have approached alternative suppliers or renegotiated supplier contracts in a bid to make savings illustrating that such businesses are determined to weather the storm. Additionally, many businesses have also looked to the opportunities to work with their suppliers and tap into the economies of bundled goods and services. Doing so not only helps to reduce cost because such bundles generally offer a combined discount, but also cuts down on administration as the number of suppliers is reduced.

Stuart Bartlett, Commercial Director at Loomis, advises that some companies could be 'missing golden opportunities by not examining what their suppliers can do for them'.

“When you are known for a particular service or product, businesses sometimes forget or overlook that you have more to offer.”, Bartlett advises.

“A perfect example would be ourselves, Loomis, who are renowned for our cash in transit business and whilst that is core to our business, we offer other services too, such as cash processing which companies will often, out of tradition simply leave to their bank to do”, he adds.

Combining services in a bundled package will not only improve efficiencies and communication within businesses but dramatically reduces the associated costs - which in today’s climate is vital.

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