These are the key trends in retail in 2017 – and who will benefit from them
The Christmas reporting season isn't over yet – the market is awaiting updates from Dixons Carphone and WH Smith – but the figures that have been reported so far have indicated some of the key retail trends investors should watch out for this year.
Read more: Brexit vote boosts Hugo Boss
The outlook for the UK consumer is uncertain; inflation is expected to hit three per cent, putting a squeeze on household incomes. But RBC analysts have picked out which retailers will benefit from what is likely to be a turbulent year:
Key retail trends for 2017
- Internet sales will continue to grow rapidly
- Winners: online-only retailers such as Asos and Boohoo
- Shift to value retailers
- Winners: B&M, Associated British Food, Costco
- Department stores will struggle
- Losers: concession brands such as Hugo Boss
- Trade is looking up for food
- Winner: Marks and Spencer
- Beauty and gymwear categories are on the rise
- Winners: Debenhams and JD Sports
The RBC analysts said Sports Direct was set to struggle when inflation set in. As a budget retailer, the company will find it "challenging to raise prices when consumer disposable incomes are being squeezed".
Read more: Sports Direct won't wait any longer and controversially appoints law firm
"We expect trading statements from Sports Direct to show a continued challenging trading environment in the UK and Europe and a weak gross margin trend mainly due to strong dollar sourcing headwinds," RBC said.
Hugo Boss' share price climbed nine per cent in trading today, but RBC said the German fashion house will continue to struggle because its recovery in America is "not yet in sight". The company issued a series of profit warnings last year, and RBC said the "disruption" would rumble on as Hugo Boss moves towards a full-price sales model, ending its relationship with the likes of Tk Maxx.