In ICAEW’s UK Business Confidence Monitor (BCM) Q4 2021, retail found itself in the less-confident half of sectors in terms of the sector’s overall outlook for next year, mainly due to transport issues and skills availability. Retail scored a relatively low 28.4 out of 100 from 1,000 chartered accountants surveyed, in comparison to a more confident sector such as IT and communications, which recorded 45.

However, when ICAEW Insights asked the CFO of multi-label wholesale showroom Rainbowwave, Jonathan Whitwam, how confident he was heading into 2022 he said he feels very confident that his business is on track for its best year yet.

“I would’ve thought confidence in the retail sector would be pretty strong in the UK,” said Whitwam. “We've come out of most restrictions, people are going out again and the high streets are busy. People have also accumulated wealth, certainly in my sector, which is designer and contemporary women's wear.”

“My wholesale business, which sells to retailers, is probably on track for its best year ever going into the spring. I'm feeling quite comfortable saying that we're going to have a good year because those orders will ship in the spring and mid-summer.”

Keeping the business nimble can solve problems quickly

Whitwam believes the reason his retail business doesn’t fall into the less-confident half of the BCM survey is because of its small size, enabling quick decision-making for problem-solving - ie raising staff quality and retail customer experience.

He added: “We've tried to generate more interest in the stores by adding personalised messages, whether that's on WhatsApp or via email, and generate more of an e-commerce or retail experience for the consumer.

“We're also trying to get much better sales assistance in-store. By that I mean if people leave, we have higher criteria for new salespeople where they are front-facing, have good manners and genuinely want to serve the customer. Reaffirming the fundamentals of a good in-store experience and raising the bar for new staff coming in.”

As a result, Whitwam said he is confident the business will bounce back into next year. “Currently, my sell-through rates are coming through very strongly, which is really encouraging,” he said.

Finding skilled staff has not been easy

Although skilled staff could be the answer to more sales, they are not easy to find. Whitwam said one of the main challenges, also felt by many in the BCM data, is recruiting skilled staff. He also said that staff turnover has been a growing problem, especially finding skilled workers, as the store is close to hitting full turnover within a year.

“If you told me 12 months ago that I’d be having problems recruiting people, I would have laughed in your face because the whole world was on furlough and there seemed to be a lot of people you could employ at the click of a finger.

“But we are really struggling to find good candidates. Two years ago, I'd have 100 applicants and I'm struggling to even get a handful right now.”

“My main concern is rent rates”

Looking towards next year Whitwam feels that rent rates haven’t deflated as much as expected, if anything they are recovering and starting to go up again.

“I don't think rising rental rates are very helpful to the retail industry, given there’s so much space. There needs to be a whole rethink on the high street on what the price is. At the moment, there is a barrier to entry for small businesses if they get these ridiculous rent prices, so it's a concern of mine,” he said. 

Accountants must keep a war chest

As a qualified chartered accountant for over 20 years, Whitwam said that disciplines

from his ACA training have come into play when safeguarding the business. The main two being holding close control over cashflow and keeping the margins in check.

“We're treading forward very carefully,” he said. “Whilst I'm optimistic I'm taking nothing for granted. We're being very frugal in all our spending, and nothing gets signed off without approval.

“I would advise making sure there's a war chest for difficult situations from an accountants’ point of view. We were ready before Coronavirus problems arose and I've got to continue that safety net because it's not going to surprise me if we have another lockdown in the future.”

Further resources:

• Read ICAEW Insights BCM coverage: Business confidence falls from all-time peak
• Click here for the full report: ICAEW’s UK Business Confidence Monitor Q4 2021.
• For insight, support, and guidance for those working or advising in the online and offline retail sectors join the ICAEW Retail Community for free.