Technology advances, tough markets and canny consumers create a challenging new world for retail. But with challenges come opportunities. Will retail reign supreme?
Is the retail sector stuck? Yes, in that the British Retail Consortium reports that total sales values are up by just 1.5 per cent in a year, and consultancies such as Deloitte believe there will be no sustainable growth in sales until 2013.
But a big no, since the pace of change in the sector is extraordinary.
For example, online retailing is growing dramatically – by roughly 15 per cent in the past year in the UK alone. And it is advancing the internationalisation of retail at breakneck speed as businesses discover new markets around the world that they can reach and supply.
At the same time, communications technologies are revolutionising consumer attitudes and behaviours. Mobile phones, tablets and every other means available are being used to test price comparisons, research recommendations, take soundings from friends and others; the impact of digital technologies extends well beyond online transactions themselves.
Technology does not put space between consumers and retailers; paradoxically, perhaps, it brings them closer together, enabling personal communications, tailored promotions and instant feedback. It creates opportunities for what IBM, for instance, has called smarter commerce.
This creates movement in the economics of the industry and new business models emerge to challenge traditional approaches. And it changes relationships with consumers who are looking to create personalised and interactive experiences. Customers in the digital age are connected, vocal and demanding.
The combination of technological advances, tough markets, global competition, sophisticated consumers, improved supply chain management and, let’s not forget, media scrutiny and the expectation of ethical and responsible behaviour – this sets quite a challenge for the modern retailer.
It is a challenge that management consultancies and members of the MCA (Management Consultancies Association) are responding to as well.
There are fantastic opportunities in this new market. Cost control will remain a priority. High street presence and brand building can be critical. But innovation and imagination remain top of the list in the reinvention of retail.
Alan Leaman is CEO of the MCA
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