According to a report from KPMG/Ipsos Retail Think Tank, retailers going to brace for another tough year ahead as geopolitical and macroeconomic obstacles along with an increase in number of regulatory compliance issues and ongoing structural changes within the industry rear their heads.

The report emphasized that the key challenge will be the consumer spending in the upcoming year. Despite expectations that there will be an increase in wages in the second half of the year, the divide between food and non-food will be exacerbated over the coming six months. Thanks to rising inflation.

KPMG’s Paul Martin points to focus on consolidation, just like 2017’s Tesco/Booker merger which is likely to continue as the market share going to remain as a “core focus for businesses.”

More number of privacy and data protection laws coming into play next year, in the form of General Data Protection Regulation (GDPR). It might have a significant effect on retail sector as those who are falling to fully understand and comply with the new rules may face devastating fines.

The report also highlights the effects on retail industry due to the outcome of Brexit negotiations. A soft Bexit expected to see slight expansion while hard Brexit likely to see it shrink.

The Retail Think Tank (RTT) added: “This ‘perfect storm’ of factors may even see the industry reach a pivotal point in 2018, with increased levels of defensive consolidation and creative collaboration – as well as the inevitable fall out of casualties – the likely outcome in the ongoing fight to survive.”