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Confidence of UK consumer businesses lags behind global trends

Published: 3 May 2011
UK consumer businesses expect to see their financial performance improve this year, but their confidence falls below the global trend, according to a new survey from KPMG International.
The research shows 52% of UK consumer businesses, including retailers and manufacturers of consumer products, believe their performance will improve in 2011, compared with 76% of businesses in the same sector across the globe.

And only 45% predict consumer spending will increase in their target markets, compared with 76% globally.

KPMG UK head of retail Helen Dickinson said: "With the current squeeze on disposable income in the UK it's perhaps unsurprising we're seeing this lower trend. However, even while we experience an erosion of consumer spending and the market remains in a state of flux, it is encouraging to see an element of cautious optimism from our survey respondents."

While the economic downturn has significantly impacted on profit and growth for many UK consumer businesses over the past three years, those that have survived the recession have emerged "fitter and leaner", said the report.

Nearly 46% of executives surveyed said they have stronger relationships with suppliers, while 41% reported better prospects for growth and 28% highlighted improved cost structures.

More than 50% of respondents intend to improve supply chain efficiency through improved distribution structure, investment in technology and supplier consolidation.

However, 39% said that maintaining profit margins will be a challenge due to rising input costs, inventory carrying costs, discounting and decreased sales volumes. And, 62% believe they will have difficulty raising prices, while 48% said market share would be difficult to grow in 2011.

Ms Dickinson added: "Success for consumer companies that have weathered the recession will depend on their ability to maintain their cost and supply chain efficiencies as well as to source and/or create innovative products and business models to grow the top line."


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