Retail in Britain seen to risk meltdown in next 10 years

Rising costs and depressed demand could reshape Britain's retail industry over the next 10 years, with bankruptcies and job losses set to rise as companies struggle to adapt, a report showed on Friday.

The cost of running a retail business is set to explode over the next decade as tighter environmental regulations, higher energy prices and more expensive supply chains create a sustained period of inflation, according to the ActiveResilience Retail Risks report by Verdict Consulting.

Verdict estimates retail cost inflation could rise to nine per cent or more over the next 10 years, from four per cent now.

At the same time, it believes consumer demand will slow, with retail spending growth moderating to 2.6 per cent in the 2010s from six per cent in the 1990s.

"Managing a simultaneous increase in costs and a slowdown in demand will be extremely challenging," Verdict said.

"Over the medium term the number of retail bankruptcies and job losses will increase steadily as players adapt to the new retail reality."

On Thursday, official data showed that retail sales volumes in Britain fell 3.9 per cent in June from May, the biggest monthly decline since records began in 1986.