In the face of increasing consumer demands, a competitive retail market has become cut-throat, with almost-monthly news reports of store closures and companies going into administration. In order to survive – let along thrive – today’s retailers need to review and re-plan their future strategies, now.
In this blog series, we will discuss some of the challenges facing retailers, and how Integrated Business Planning is the solution for a successful transition into a 21st century omni-channel retailer. In today’s blog, we identify the key issues affecting retailers, particularly those who are overwhelmed and unprepared by the seismic shift in the retail industry.
E-commerce The retail landscape of the 21st century has dramatically changed, and the acceleration of e-commerce mean traditional retailers face challenging times ahead, as consumers continue to shift from bricks to clicks. Vying for prime real estate retail space has been replaced by the fight for cyberspace domination, and it is predicted that by 2021, over 2.14 billion people will be buying online. Existing retailers who have yet to align their online strategies with in-store plans are not only missing a trick, but are severely impacting on both their profitability and sustainability as a 21st century business.
Changing consumer attitudes With constant connectivity placing power directly into buyers’ hands, customers are now in control and have raised the bar in terms of expectations. The digital revolution is directly responsible for the creation of the ‘anytime, anywhere consumer’; shoppers can purchase goods around the clock, however and wherever they want. They want a personalised service, with customisable products at the lowest cost. Consequently, a seamless shopping experience across all channels is not the exception, it’s the rule and anything less results in lost sales. However, many retailers are struggling with the changes to systems and infrastructure necessary to make the transition to omni-channel provider.
Competitors From global conglomerates encroaching on new sectors, to the emergence of the ‘start-up’ culture, it has become increasing difficult to identify where the next competitor coming from. Whether it’s Amazon infiltrating the pharmaceutical sector, crowdfunding platforms fueling ‘the next big thing’ or ‘the value player’ shaking up the status quo, retailers now have to contend with more competition than ever before.
Rising costs Cost increases are coming from all directions, negatively affecting profitability as organisations scrabble to rethink ways to maintain healthy margins. As property prices sky-rocket, rents are increasing faster than revenues – shops in London faced a six per cent rise in 2017, as well as a nationwide increase in business rates. The increase in the National Living Wage is expected to push up the overall wage bill by two to four per cent, compounded by a rise in pension costs as more of Britain’s ageing population enters retirement. And, the weakened pound has pushed up prices of raw materials, and inflated prices erode revenue and profit for traditional-model businesses, as consumers keep their purse strings tightly tied and are unwilling to pay higher prices.
With so many challenges to confront, it’s clear that retailers need to evolve the traditional retail model into a much more customer-centric operation, led by integration and driven by innovation. In Part 2 of this series, we reveal why IBP is the solution to rebooting retail.
This blog was based on an extract from our white paper, “Retail Rebooted: How to remain competitive in the 21st century’. You can download it for FREE here.