By Marcus Leach

High street retailers are being warned to embrace a raft of new innovations in 2012 or risk adding their name to the roll call of UK businesses that have failed in the last 12 months.

Firms are being urged to adopt five key tactics to help cope with what is likely to be one of the toughest ever starts to a non-recession year:

- Update desktop and mobile websites to make the online sales process as smooth as possible
- Make use of data technology to customise promotions and personalise products
- Offer ‘click and collect’ and consider converting out of town formats to handle these orders exclusively (as done by the major supermarket chains)
- Team up with complementary retailers in dual-brand stores
- Equip staff with mobile payment devices so customers can use contactless payment (currently on trial in Starbucks and McDonalds)

The advice comes in BDO’s retail forecast for 2012, which predicts the combination of rising unemployment and inflation, falling consumer and stock market confidence, and crisis in the Eurozone will restrict growth over the Christmas period to between 0-2%. For 2012 retail spending is likely to remain at a virtual standstill.

“Although the market is undoubtedly tough, following these rules should mean gains in both traffic and conversion, resulting in expansion for sales on retailers’ online channels,” said Don Williams, National Head of Retail and Wholesale at BDO LLP.

“With momentum swelling behind new mobile platforms, making delivery options more flexible, affordable and accessible through services like click and collect could mean online growth accelerates even further next year.”

The 2011 Christmas period will provide a microcosm of how 2012 will pan out, explained Williams. “Trends get magnified at Christmas. Typically strong retailers get stronger and weak retailers get weaker.

This year the economic backdrop means even in the best case scenario overall sales will only probably grow by 2%. Gross margins will be lower too, so retailers with strong brand credentials who can avoid heavy, unplanned discounting to clear lines will report growth, but struggling retailers will see year-on-year slumps.”

Despite this, retailers should not forget next year’s bright moments, Williams added.

“Having seen the psychological impact the Royal wedding had this year, we expect the Queen’s Diamond Jubliee celebrations to boost consumer confidence in the run in to the sporting extravaganza of the 2012 Olympics," he said.

“The good retailers with strong brands will be able to tap into this sizeable feel good factor, boosting sales and taking advantage of better margins thanks to falling commodity prices, fuel costs and inflation.”

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