Navigating Retail Disruption
With consumers holding increasing power and the industry experiencing transition, how will retailers position themselves for a successful future?
Jan 17, 2019
NEW YORK CITY -- As retail collides with adjacent consumer-focused sectors, the industry continues to undergo constant disruption. However, amid the disruption, one thing remains consistent: Consumers are becoming more powerful, with expectations of having it all.
According to Deloitte’s new 2019 Retail Industry Outlook report, 2018 left the industry with a lot to digest—a strong U.S. economy, a record-breaking holiday season, mixed retail earnings and some high-profile bankruptcies, along with global trade and economic tensions. Bolstered by a strong labor market, growth in disposable personal income and elevated consumer confidence, 2018 experienced strong retail sales. But the economy may face some headwinds in 2019—making the year one of transition for retailers, which may need bold moves if they want to set themselves up for success in the future.
Where should retailers focus their strategies in 2019 to help move to the right side of the tipping point? Deloitte points to six strategies.
- Loyalty: Emotional vs. transactional. Retailers should look beyond tiered programs built around traditional loyalty and benefits—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.
- 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 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.
- Emerging technologies. Gone are the days when IT strategy was limited to architecture, modernization, and enterprise resource planning (ERP) systems. Investment options, technologies, and vendors number in the thousands, making it challenging to navigate and hone in on the next big thing.
- Leadership lessons from China. To build a competitive advantage, retailers should consider looking at global cross-industry trends and build capabilities that can shape consumer experiences. For example, in China, consumers and the retail market have skipped a generation of technology: Next-gen technologies in the U.S. are yesterday’s technologies in China.
- Privacy by design. For retailers, consumer 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.
- Supply chain as a differentiator. The supply chain is quickly becoming a way for retailers to offer consumers a differentiated service. But making the supply chain faster, more predictable, and cheaper is a difficult triad to manage simultaneously.
