The gathering storm predicted to hit retailers in the new year

IT HAS been a bruising few months for the UK's retail sector, as brands have been buffeted by rising inflation, crumbling consumer confidence and huge increases in overheads driven by higher energy and materials costs.

- Rhiannon Curry

At least two big names Joules and Made.com have fallen into administration.

So what does 2023 hold for a sector which appears to be lurching from one crisis to another? As the new year begins, retailers need to navigate a recession coming on the back of a global pandemic from which many are yet to fully recover.

"A tempest is definitely brewing and will fully hit landfall in 2023," said Stephen Springham, head of retail research at Knight Frank.

"Next year will undoubtedly be tough; no recession is easy for the retail sector.

"But consumer demand is unlikely to collapse completely. As previous recessions have shown, shopping may actually prove a haven for the consumer in the teeth of the hurricane, people preferring to spend rather than merely feel sorry for themselves." The Office for Budget Responsibility has said household disposable incomes will fall by 4.3% in the current financial year and by 2.8% in 2023/24, the sharpest declines in records dating back to the 1950s. But there are signs that consumer confidence may have passed its nadir, and is beginning to climb.