The Shape of Things to Come From Legacy to Digitimacy
Retail Business
Embrace new practices and methodologies to deliver individualized customer experiences.
Introduction
The Retail Business Model is evolving. Are you Keeping up with the Change?
The COVID-19 pandemic has created massive challenges for retailers around the world, with some retailers to thrive and others to struggle to survive. At the same time, COVID-19 has accelerated key fundamental trends that were already influencing the sector: business model evolution, the value of purpose, the ruthless focus on reducing costs and the increased power of the consumer.
TREND 1
The Retail Business model is evolving: The rise of platforms is changing the retail landscape.
21st Century Enterprise
Source: Global Retail Trends 2020, KPMG, 2020
LEGACY
- Speed Market
- Scalability
- Smarter Portfolio Management
TRANSFORM
- enterprise transformation
- leverage the role of new valuable assets: data
- build new operating models and collaboration
TREND 2
Purpose moves to the forefront: Customers want to buy from companies who stand for something bigger than profits
Journey to Becoming Purpose Led
Source: Global Retail Trends 2020, KPMG, 2020
TREND 3
Rethinking the cost of doing business: Retailers take new approaches to cutting costs and driving profitable growth
Impact in Retail - Global
TREND 4
Customer’s choice comes under the microscope: As customers focus on availability over selection, all signs suggest discounters and platforms will thrive
Key Challenges
Consumer’s Shopping Behavior Has Changed
Rather than being a planned, discrete activity, shopping occurs whenever and wherever the mood strikes today’s always-on consumers— and this is increasingly while they are doing something else. Seven in 10 consumers surveyed say they shop in these so-called “micro- moments,” and 35 percent do so at least weekly.
Of consumers shop in "micro-moments" (shopping while doing something else.) more than one in three say they do so at least weekly and up to multiple imews daily.
Due to changes in shopping preferences over the past five years, consumers want in how, where, and when they make purchases across product categories.
Source: Meet the 2020 Consumers Driving Change, IBM 2020
Sustainability has Reached a Tipping Point
Consumers seek products and brands that align with their values. Nearly 6 in 10 consumers surveyed are willing to change their shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important for them. And for those who say it is very/extremely important, over 70 percent would pay a premium of 35 percent, on average, for brands that are sustainable and environmentally responsible.
Of consumers αre willing to charge their to help reduce negative environment impact.
Values are as Important as Value
Most consumers fall into one of two segments: Value-driven consumers, who are primarily concerned with getting their money’s worth and select brands based on price and convenience; and Purpose-driven consumers, who select brands based on how well they align with their personal values and who are willing to “walk the talk” when it comes to sustainability, changing their behavior, and even paying more for brands that get it right.
Of respondents worldwide belong to one of two shopper segments: value-driven consumers (40%) who seek products and services aligned with their values.
Source: Meet the 2020 Consumers Driving Change, IBM 2020
Preference of Brick and Mortar Stores
With the sheer amount of brands choosing to move to online marketplaces, the number of brick and mortar stores is slowly dwindling.
Decline of Retail Stores
Over the past few months, there has been a startling decrease in the number of retail stores, and the number is decreasing at a rapid pace. Most the retailers are doing so in favor of online stores and marketplaces.
Price Comparisons
A large number of brands tend to offer different prices offline and in-store when it comes to their products and this is something that affects the manner in which people shop.
Integration of Offline and Online Mediums
An incredible 84% percent of customers believe that retail brands should look for ways in which they can integrate offline and online mediums to provide a heightened level of service to customers. Customers want to engage with the brand more and see this as one of the best ways to enhance that service.
Millennial Shopping
67% of Millennials see online shopping as their preferred means to buy something rather than opting for an online store where they can see or feel the clothing. This customer audience also denotes one of the largest sections of customers for the online retail industry. Millennials spend almost 50% more time shopping online as compared to individuals belonging to Gen X.
