The past few months have brought unprecedented uncertainty, complexity and change to the retail industry. In the Coronavirus wake, some retailers will thrive while others struggle to survive. Interestingly, COVID-19 has accelerated four key fundamental trends that were already influencing the sector:
Trend 1: Business model evolves
Even before COVID-19, it was becoming increasingly clear that store-based retailing has passed its zenith. While many physical stores will certainly return to growth, it is clear that the days of being able to drive growth through physical stores are over. Many are looking to platform companies to help deliver some of those important capabilities.
Trend 2: Purpose moves to the forefront
From the outset, the vast majority of governments and businesses have been clear that they plan to put people ahead of profits. COVID-19 only accelerated a trend that was already well underway. Consider this: according to a study by Edelman inearly two-thirds of consumers around the world said they would decide to either buy or boycott a brand based solely on its position on a social or political issue.
Trend 3: Rethinking the cost of doing business
Most retailers recognize that conventional forms of cost cutting are no longer enough to shore up margins and rebuild the business. Even after the aggressive cost-containment strategies rolled out in the immediate aftermath of the response to COVID-19, most retailers recognize they will need to go further if they hope to return their business to profitable growth in the years ahead. Expect to see a flurry of investments focused on improving the value of existing assets over the coming year.
Trend 4: Customer choice comes under the microscope
In today's environment, customers care less about breadth of assortment and more about availability. And that could change the way many retailers operate. As different countries moved into lockdown status and “non-essential” retail stores closed their doors and grocery store shelves emptied, those retailers who know their customers had a clear advantage.
Do not hesitate to contact me in case of any questions about this topic – Ivana Mazániková, Partner responsible for retail and consumer markets.