Retail strategies are more ambitious, digital, and purposeful than at any time, but their realization hinges on the suppliers that will power them. With low margins commonplace, and traditionally c. 80% of total retail expenditures going to suppliers, how well retailers engage the “external enterprise” will be the key influence on success or failure.
The prevailing operating conditions within retail are hugely challenging and need to be navigated with expert care. Forget transformation, this is “migration on masse.” The distance between the bleeding edge and those that are traditionally slow to follow is narrowing as the realization kicks in that this is the new normal.
Moves need to be made now, and this is going to be problematic for those that are not adept at driving innovative change. Speed, brand, culture, and commerciality will matter when seeking to outpace emerging capacity, capability, and creative bottlenecks. The market is one ripe with opportunity but also with risk.
As specialist procurement consultants that work with some of the world’s leading retailers, we have identified three key trends shaping the retail sector in 2022:
New digital experiences
Retail leaders are creating more immersive online experiences, creating new levels of customer expectations that need fulfilling.
While a catalog-style web page may have been enough to capture consumers’ curiosity ten years ago, technological advances have set a new bar for consumer expectations. No longer are consumers willing to play guessing games online as they search for the right size and the right product. They want to try on a dress, size up a sofa and even discuss it with friends as they go. And with a new wave of augmented reality technologies (AR), retailers are now able to deliver.
Innovation doesn’t just happen, and procurement teams should be playing their part in identifying and engaging the suppliers that unlock change. But this isn’t “procurement as we knew it”; this is more about speed and innovation – making markets through the creation of cooperative and collaborative relationships.
In-store gets a makeover
It’s not just digital where things are changing – it’s also true of physical stores. Retailers have long been looking to lure customers back into physical stores with an experience that offers more than just retail, and increasingly technology is being leaned on to deliver this.
Physical stores will increasingly become experience-focused and complement digital experiences to create a seamless customer journey. Central to all these innovations is the need to establish the right external partnerships and bring in the right expertise to deliver this next generation of digital.
Customers want to be delighted
From sustainability to social justice, consumers have greater expectations than ever. Sustainability is fast becoming a consumer purchasing priority for consumers. The Future Consumer Index found that 84% of people say sustainability is now important when making purchasing decisions, while 43% in a separate 2020 survey said they were already actively choosing brands due to their environmental values. Sustainability is only going to grow in importance, so working out how to decarbonize is moving from a ‘nice-to-have’ to a ‘must-have’.
Yet many customers are also still extremely price-conscious, meaning retailers need to strike a balance and have to be laser-focused on costs.
Throughout The Great Retail Reset report, we explore how these three forces in even more detail and how they are driving retail transformation in the coming year and offer guidance as to how retailers can seize the post-pandemic opportunity.
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