Retail Stores Industry Trends (2019)
With customers holding increasing power and the industry experiencing a year of transition, what will retailers need to do to position themselves for a successful year and beyond?
As retail collides with adjacent consumer-focused sectors, the industry continues to undergo constant disruption. However, amid the disruption, one thing remains consistent: Customers are becoming more powerful, with expectations of having it all.
Here are key strategies to help retailers navigate industry disruption:
To stay competitive, many retailers have shifted their investment strategies over the years. They’ve moved from growth via new stores to growth via big investments in all areas of the business, such as launching new digital sales models, acquiring other businesses, or transforming their fulfillment processes. The cost to increase market share continues to grow, and many retailers find themselves in a precarious position as they try to figure out how to win battles on multiple fronts.
Where should retailers focus their strategies to help move to the right side of the tipping point? Those who can synchronize their bets to create harmony across the organization may be best prepared for what is to come.
- Loyalty: Emotional vs. transactional
Retailers should look beyond tiered programs built around traditional loyalty and benefits, such as points, dollars off, gifts, mailers, that at best elicit “transactional” loyalty. In an industry shifting toward experience-based models, retailers should look to make emotional connections, not just transactional ones.
With a genuine approach to driving customer loyalty, retailers can optimize loyalty programs and make them even more valuable. Aligning the program with the values and the consumer conversation is imperative. Recently, loyalty programs have been expanding to focus on convenience (home delivery or issue resolution) and experience (exclusive events and limited-edition products).
- Digital startups and funding
Digital startups are no longer playing in the shadow. They’re addressing chronic issues faced by the retail industry through innovative offerings, personalization, authentic emotional engagement, differentiated fulfillment, and more. And the amount of capital flowing to retail tech startups is allowing these companies to realistically compete with established players.
To help offset the early gains made by these startups, traditional retailers will have to push ahead, blurring the lines between business development and corporate strategy. To acquire the next big idea, they might have to seek out guidance from specialists or through a scouting approach.
- Emerging technologies
Gone are the days when IT strategy was limited to architecture, modernization, and enterprise resource planning systems. Investment options, technologies, and vendors number in the thousands, making it challenging to navigate and hone in on the next big thing.
Ultimately, retailers should figure out how to scale these solutions and embed them into their way of doing business. To leverage the true power of next-generation technologies, retailers should make some significant changes. They should be able to consistently mine the data they collect, transform their operations to deliver on the brand promise, and adapt to the future of work.
- Leadership lessons from the Far East
To build a competitive advantage, retailers should consider looking at global cross-industry trends and build capabilities that can shape consumer experiences. In China, customers and the retail market have skipped a generation of technology: Next-gen technologies in the U.S. are yesterday’s technologies in China.
Retailers should be looking at the leaders in China to better understand the art of the possible in emergent areas such as online-to-offline, last-mile delivery, supply chain as a service, social commerce, and the implications of advanced public and private infrastructure.
- Privacy by design
For retailers, customer data is a must-have. For years, the industry struggled with how to create and use data. Now companies are on the hook for what data they have and what it says about individuals.
With regulation after regulation hitting the market, it’s time retailers had their privacy compliance road maps in place. But compliance can also be a catalyst for reinventing personalization and having honest conversations with customers. Integrity matters in creating loyalty, especially when it comes to dealing with personal identity.
- Supply chain as a differentiator
The supply chain is quickly becoming a way for retailers to offer customers a differentiated service. But making the supply chain faster, more predictable, and cheaper is a difficult triad to manage simultaneously.
As retailers buckle down and prepare for potentially challenging times ahead, supply chain improvements can be a significant growth driver. But rather than just investing in trends like automation smart packaging in reaction to competitors, retailers should think about accumulating long-term competitive advantages through wider supply chain strategies.