UK Companies ‘War Gaming’ for Expected Recession

A recession could be on the horizon for the U.K., with companies facing both slowing consumer demand and inflation that has ballooned costs, the Financial Times wrote Sunday (July 10).

To counter the impact, several companies have reportedly begun “war gaming,” with some of them adjusting their medium-term plans for periods of low or nonexistent economic growth.

Businesses have already said they can see the writing on the wall. For example, one chief executive of a leading supermarket chain told the FT consumers have been planning their monthly shopping around paydays.

Additionally, some shoppers were asking cashiers to stop scanning items at a certain limit, such as £30 or £40, to help limit spending. Meanwhile, companies have been scaling down their forecasts. The report noted that Currys, an electrical retailer, cut its profit forecast this week.

Numerous other companies in travel, leisure and other such sectors which rely on discretionary spending are also likely to be heavily impacted, as the period of extravagant post-pandemic spending is likely to stop after this summer.

Martin Sorrell, executive chair of digital marketing group S4 Capital, said it’s likely there will be a “cyclical recession in parts of the world” either this year or next year — and while it might not be a big one, he said it would take time for things to change.

“People have to plan for a tough 2023,” Sorrell said. “You have to be focused now on growth and where you can find it geographically and technologically in the next two years.”

PYMNTS wrote that as customers are preparing for worsening economic issues, retailers have been offering an emphasis on convenience and value.

Read more: Retailers Tout Value and Convenience as Consumers Brace for Recession

Lots of customers shop at deep discount stores even in better economic times, but now many merchants and analysts are saying there’s likely to be a deluge of customers looking for bargains and deals where they might not have before.

“Value and convenience are more important than ever to our shoppers and the communities we serve,” Dollar Tree CEO Michael Witynski said on an earnings call, according to the report.

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