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David Scott, Head of Consumer Industries, on current trends, challenges and causes for optimism in the retail industry
Date published: Date modified: 2023-08-31

For the second year in a row, NatWest will host our Retail and Leisure Trends Summit taking place in London this September. As NatWest's Head of Consumer Industries, David Scott supports customers and businesses across the retail, leisure and food manufacturing sectors; although the bank's involvement is mostly debt-led, they also maintain vital relationships across the sector, aided by current data and insight. 

Ahead of the event, we spoke to David about NatWest's role in the retail and leisure sector, current business trends, and why he believes there is cause for optimism in today's challenging market.

Could you give us some background on yourself, and how NatWest is involved with the retail and leisure sector?

I’ve been with the Group for just over 20 years. During this time, I’ve held a variety of roles within NatWest, but my current one is National Head of Consumer Industries, that encompasses Retail, Leisure and Food Manufacturing. In the past, I’ve worked in a strategy team looking at how we expand into new markets, I’ve worked in Structural Finance, Asset Finance and I spent several years in branch banking.

In terms of the Group and how we’re involved in the sector, we’ve been sector-focused for as long as I can remember. What that means is that we have accredited frontline managers who solely support customers in retail, leisure or a combination of both. We’ve got dedicated credit managers that support them, together with a whole host of other people who work alongside us to make sure it happens. You then get a consistent strategy and face to market. Ultimately, it should make it easier for our customers.

Consumer Industries is a key sector for the bank, where we strive to champion potential and help customers and businesses thrive. Whilst our involvement is predominantly debt-led, the relationship and insight we can offer is equally important.

What do you think are the key trends we'll see across UK retail and hospitality going forward?

Everybody is fully aware of the backdrop of rising costs combined with faltering demand and huge pressure on consumers. We are all adjusting for higher interest rates and the increased serviceability cost of debt. One trend we are seeing is how businesses adapt and build long-term business resilience.

I think another trend going forward is how businesses use ESG to their advantage. We as a group are on our own journey, but you can already see how consumers are starting to shift their loyalty and buying behaviours towards businesses that can demonstrate strong commitments to their ESG strategy and those that are taking real action.

Finally, we're seeing a great shift in how people leverage data and AI within their businesses, partly to save costs. And, to land this properly, partnerships are a key aspect in a very volatile market. It's one of the areas we expect to see massive investment in the coming years. You look at some of the concepts that are rolling out, the use of tech and AI sets them apart.

What do you think are the most important factors for you to concentrate on in the months ahead? 

We need to work very closely with our customers to actually understand what they need and how we can best support them. It's not always about debt. Advice, guidance, support, engagement with other people in their sectors is equally as important.

Externally, everything points to increased insolvencies across the market and increased pressure. However, at the moment consumer demand appears to be resilient, with a willingness to spend, and you hope that the outlook is more positive than perhaps we've been led to believe.

Finally, ESG. We're still trying to learn from the customers that have done it well and to help educate those that are perhaps slightly behind on the journey. Equally, we need to provide the right financing solutions for those customers to be efficient on that journey.

Despite recent closures, including from Wilko, do you think there is still cause for optimism in retail?

100%, is the short answer. We've seen examples of positive growth across the sector, be it your luxury retailers, right through to your value operators. The recurring theme we see across the retailers that are successful is a combination of good customer service, an ability to demonstrate their values, strategy and purpose and to offer the consumer some form of experience as part of the shopping process.

The nice thing is the number of new emerging concepts. There's a lot of people testing the market through various pop-up operations and collaborations. They adapt, they expand, they go for it. It goes back to the entrepreneurial spirit. There is still an inherent consumer demand.

Shifting focus to the leisure and hospitality industries, what trends did you see in those sectors in the first half of the year?

For leisure, within our operators there's a real focus on minimising any unnecessary cost and on staffing to ensure they retain and recruit the right people. It's key they're fully engaged with their staff. Staff need to understand what the strategy for the business is, buy into it and you need them on board to deliver the customer service that we all expect.

Externally, we're all looking for experiences that we've missed out on during COVID. If I think of our hotel and casual dining operators, we've seen a massive domestic staycation boom over the last couple of years. I think what that's done is educated us that the UK has some really great places to visit. This year there has been a resurgence in overseas travel. Equally, there's massive demand from international tourists to come back into the UK. And clearly we're benefiting from that.

The number of tourists visiting the UK, and London in particular, has increased recently. Do you see this as a positive? 

For our hoteliers, we have seen a massive upside from the return of international tourism. The answer is yes, it's a massive positive. Increased tourism also benefits numerous wider sectors as spending filters through.

The flipside to that is the climate impact. We can't ignore that. What we need to understand is how we meet our climate ambitions alongside what our customer base are looking to achieve.

Why are events like ours important to NatWest, and what are you most looking forward to on the day? 

I've had the privilege of listening to Lucy, Ronald and your previous panel speakers on numerous occasions and I think we all know how good these events are. For us as a bank, as we came out of COVID, we found insights partnerships were vitally important to understand what was happening, so we could implement a robust strategy towards recovery. That hasn't changed. We continue to rely on trusted advisors and partnerships across the sectors. The insights into what's happening in a dynamic physical retail estate helps us provide accurate updates to our customers and we are all super proud to be able to support The Local Data Company again in hosting this event.

Sam Mercado, LDC Marketing Executive

Sam Mercado, LDC Marketing Executive The Local Data Company 901 901

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