I started to work at WH Smith in Slough High Street 45 years ago this week. I mention this because I received a tweet from World Retail Congress asking what future developments can you see happening in retail in 25 years?

It’s a big question and my view of the last 45 years may be useful in answering it. I think that there are five elements that will drive change, which I will be looking at over the next few posts. These are:

  • Inflation
  • Population
  • Energy
  • Transport
  • Technology.

Since the start of the most recent financial crisis in 2008, governments across the world have borrowed huge amounts of cash to fund their spending. The UK Government has racked up nearly £750 billion in new debt. Treasury figures show that the debt figure was £530 billion in 2008 and is now £1,260 billion. And then there is quantitive easing. History tells me that governments have a tendency of using inflation to ‘manage’ high debt.

My memories of the inflation of the 1970s are not entirely laden with doom, because rapidly rising prices did give a false sense of success; top line sales went up, but volumes didn’t. What did come along with high inflation though were high interest rates. On Black Wednesday 1992, the Treasury put the bank rate up to 12%, and then 15%. I remember feeling decidedly vulnerable on hearing the news as the business loan I took out in 1989 was on a base rate plus 4% agreement. Painful to say the least, my immediate thoughts were about how I would be able to stay in business.

Looking forward from today’s retail scene the contrast between Tesco and Aldi is quite stark as far as debt burden is concerned. Tesco has grown on borrowed money and Aldi grows out of generated income. In a potential period of higher inflation and interest rates I know who I would bet on for success.

Here are a couple of issues to consider.

How comfortable are you with your debt and borrowing?

Do you have tools for measuring success in your business that is based on sales volume and inflation adjusted sales/profit?

Higher inflation demands a higher focus on cost control, when did you last review your expenses?