Key retail trends in 2020
Key retail trends in 2020
In KPMG in Thailand’s recent study, Key Retail Trends 2020: Preparing for the new reality, changing trends have been emerging in the consumer and retail sector since pre-COVID-19 days. In the COVID-19 wake, some retailers will thrive while others will struggle to survive. Interestingly, COVID-19 has accelerated four key fundamental trends that were already influencing the sector: business model evolution, the value of purpose, the ruthless focus on reducing cost and the increased power of the consumer.
“Rather than stop these trends in their tracks, the recent shifts in retail fundamentals has made these trends even more acute and urgent,” says Charoen Phosamritlert, Chief Executive Officer, KPMG in Thailand, Myanmar and Laos.
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 only drive growth through physical stores are over. Those with no existing online or delivery channel will struggle to survive this challenging time. Retailers are being forced to rethink the complexity of their value chain. More than just buying and selling products, companies now need to be good at things like online fulfillment, home delivery, data analytics, AI, machine learning and process automation. Many companies are looking to platform companies to help deliver these capabilities.
Brands are being judged by their actions and their purpose. According to a study by Edelman1, nearly two-thirds of consumers around the world said they would decide to either buy or boycott a brand based solely on its position or political issue. Brands that demonstrated a positive impact on people’s lives grew 2.5 times more (over a 12-year period) than brands with a low perceived impact. This year expect to see retailers start to focus more on transparency across the entirety of their business. Those going the extra mile to support their customers and their employees will undoubtedly gain greater brand loyalty.
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. Apart from the obvious cost consideration of supply chain management, inventory management and shipping and receiving costs, we expect to see retailers start to take a closer look at the value of their other assets, especially stores, employees and customer loyalty.
In today's environment, customers care less about breadth of assortment and more about availability. Especially during the COVID-19 lockdown, many grocery retailers started exploring ways of narrowing their focus down to a decreased range of high-demand items, thereby also increasing efficiency in supply chain and working capital measures. In the near future, we think only two types of retailers will survive: those offering a limited yet curated selection and those offering unlimited selection.
“From the four retail trends that emerged in 2020, it is clear that companies should prepare for undeniable changes by improving their loyalty programs, explore a wider range of models and approaches for gathering and analyzing customer data, have a clear purpose and a focus on transparency, as well as invest in platforms that will improve aspects of their business,” concludes Charoen.
See the full report here.
Thai version: แนวโน้มของธุรกิจค้าปลีกในปี 2020
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KPMG in Thailand, with more than 1,900 professionals offering Audit and Assurance, Legal, Tax, Legal and Advisory services, is a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
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