By Daniel Hunter

The high street in 2013 is going to be characterised by improved underlying trading conditions with total retail spending growth forecast to equal 3%.

However, conditions will remain uncertain, with no return to the consumer boom that characterised the mid noughties. This forecast comes from a report released today by BDO entitled Better days ahead?

It predicts retailers who crack the combination of service, quality and convenience both in store and on line can expect better growth prospects. Conversely retailers who stick to old operating models of physical based stores will continue to struggle.

Low unemployment and a lack of significant tax rises on the horizon should ease the squeeze on consumer spending that has now prevailed for more than two years. Measures designed to increase bank lending could also kick-start the housing market, leading to further “hints of optimism”, the report adds.

“The consumer in 2013 will remain cautious, considered and impatient. They will respond to retailers that provide the opportunity to buy innovative products, wherever and whenever they want it," Don Williams, Head of Retail and Wholesale at BDO, commented.

"To take advantage of the opportunity retailers will need to continue to innovate and investment in technology will remain a key success factor.”

He added the renewed confidence and “cautious revival” should also see more M&A activity.

“Over the last four years we have seen private equity stepping into to rescue distressed or poorly performing and over indebted retail businesses. But in 2013 we may see increasing evidence of foreign buyers looking to secure well run UK brands. The ‘Made in Britain’ tag has become a real draw for overseas investors, who see design expertise and the UK brand as something worth investing in.”

The forecast also contains some retail predictions for 2013 including:

- ‘Rightsizing’ store rationalisation and competition for prime space, with rents likely to reach record levels in some towns

- Ever greater online sales, particularly thanks to the introduction of technology such as 4G

- A leap in the use of mobile tools, such as augmented reality, to customise products and promotions

- A recovery in the DIY market thanks to planning reforms that could act in the same way as the vehicle scrappage scheme helped the car market

- Retail guru and TV presenter Mary Portas continuing her on-screen crusade to save the high street but don’t expect many failing high streets to recover

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