Retailers expect sales to grow by an average of 4.7% this year as the economy continues to recover, according to TLT's Retail Growth Strategies Report 2015.
If this level of growth is achieved then the retail sector will significantly outperform the wider UK economy, which is only expected to grow by 2.4% in 2015.
However, price wars look set to continue, with more than a third expecting to reduce prices in 2015.
An overwhelming majority (59%) of the biggest high street names expect 2015 to be a year of growth, reflecting that over two thirds are planning to invest more or the same in their businesses as they did this year.
By the end of 2015 more than two-thirds of retailers will offer click and collect services, integrating the online and offline parts of their customer proposition.
These were among key findings from the survey of senior managers at 100 of the top UK retailers, who were questioned about their expectations and investment intentions for the year ahead.
The vast majority still see physical stores as an important part of the mix for profitability, although are increasingly unclear what that contribution will be as shopping patterns and technologies evolve.
Perran Jervis, partner and head of Retail & Consumer Goods at TLT said:
“The impressive growth rate anticipated by some retailers, and a determination to invest, shows that there is a continued confidence that the recovery is on track. In particular online growth means investment in many areas, not just technology, but in staffing online teams, changing use of physical stores and increasing logistics capability.
"Heavy investment, even during periods of uncertainty, in technology, logistics and overseas expansion will ensure that UK retail remains at the very top of the global market."
The survey also found that retailers were finding it easier to get loans from banks than in the recent past, and were likely to use them to fund their expansion plans.
(Numbers in brackets are percentage of retailers saying this):
- Sales growth of 4.7%. One-fifth expecting growth of more than 10%.
- Growth to be driven by online sales via mobiles and tablets (69%).
- Grocery sector likely to contract (63%). Only 5% predict any growth.
- Majority of retailers think the beauty (65%), clothing (63%) and homeware (52%) sectors will grow.
- Reduction in prices (35%). Put up prices a little (13%).
- Interest rates rise could stall growth (78%) as could concerns about the size of consumer debt (61%).
- Physical stores ‘vital’ for future success (67%). But nearly half see a future with fewer but larger ones (46%).
- Harder to measure success and profitability of stores (66%).
- Key areas for investment: websites and mobile apps (69%), improved IT systems (61%) and logistics (57%)
- Majority have expanded overseas or plan to do so (58%). However, a significant proportion will keep growth plans focused on the UK (42%).
- Most retailers looking to expand abroad will do so online (72.4%).
- USA (39%), Germany (26%) and China (22%) are the three most popular countries for UK retailers to expand into.
- More than half expect to spend more on technology than they did in 2014 (51%).
- The investment in technology is primarily seen as a way to generate sales (57%) and reduce costs (32%).
- A majority of retailers believe bank loans are now available (84%), albeit 34% say that they are only available with some difficulties. Bank loans will be the most popular method for financing growth.
- Click and collect planned or in use by majority of retailers during 2015 or beyond (67%).17% volume growth expected in 2015 and 74% of those who offer it think that click and collect has increased sale in stores.
- Best prospects for growth are high streets in market towns and the least those in small towns and villages.
- The UK region with the most potential for new stores is the South West and the region that is most saturated is the North East.
- Most retailers will keep staffing levels at the same level (58%) or increase staffing (28%) in 2015. 'Online teams' will see the largest investment, followed by 'warehousing, logistics, distribution & fulfilment'.
- The top three things that retailers would like the Government to do in order to support growth are: reduce VAT (76%), lower NI contributions for employers (59%) and lower corporate taxation (55%).
- Cyber security tops the list of concerns for senior management.