Retail segment is getting redefined faster than before as global economic uncertainty increases. Economic crisis has left a deep impact on consumers making them seek value in multiple ways. This has impacted players in the sector who have responded by keeping their costs low to be able to operate in a low volume and low margin environment. High inventory levels built earlier are now offered in a multichannel format that has various promotion schemes to build the consumer confidence back to normal level. On the other hand, digital retail is catching pace and the players are destined to face strong competition. As recovery gathers pace, players will seek topline growth and how the industry takes shape will depend on how the players attract the lost attention of consumers by simultaneously managing their efficiencies.
Key trends shaping the industry:
New markets, formats and opportunities: Considering sluggish recovery at home, mass and speciality retailers alike are making inroads in emerging markets to boost their topline. Regulatory environment is playing a key role in determining their growth although markets offer very low penetration levels. To suit these new markets, major players have embarked into partnerships and are offering retail in new formats.
Online resurgence: Recent introduction of convenience and payment options are causing online retail to grow more in developing countries than developed ones. Markets are converging and in coming years online retailers will pose strong competition for traditional retailers.
Evolution to continue: New markets coupled with new channels to reach customers are forcing both online and offline retailers to renovate their product lines, channel strategies and earlier formats. New experiments to attract customers by solving subtle issues related to product, price, place and promotion will evolve and players who better manage these strategies with an early time to market capability will dominate the segment.
Challenges facing the players involved in the industry:
New customers: Understanding demographics of customers in emerging countries is posing a great challenge in offering new products to customers that will help in generating significant topline. Partnering with the right local players that can complement international players in customer knowledge, supply chains and distribution networks will be the key in establishing strong foothold in emerging markets.
Online expertise: Understanding dynamics of online shoppers and customizing promotions and loyalty programs that can reach customers in a variety of online places where customers visit requires a new level of data mining. Building capability in this domain will require consideration of in-house as well as third party talent. Faster knowledge assimilation and roll out of relevant offering in this space will give players long term edge in supporting topline growth.
Successful Innovation: Experimenting with new formats of retail and expanding to new channels will require careful consideration of costs to keep profits coming. Sustainable innovation will require effective local supply chain strategies which do no conflict with international processes in place. Retaining customers by considering their needs and offering relevant packages will make sustainable growth successful.
How can BMGI help?
BMGI has made inroads into the retail industry through its extensive knowledge of emerging markets which it has used to deliver tangible benefits in bottom-line through strategic and operational execution.
BMGI's through it's Retail Strategy Consulting services assists clients in addressing their strategic challenges and enabling them to discover value in their business.
BMGI's strong foothold in successful innovation techniques has helped companies in inventing new ways of doing business by offering unique solutions to issues ranging from offering new products that ensures loyalty from customers to capitalizing full potential offered by the digital space. BMGI has a legacy in solving supply chain and channel partner issues is exemplary and companies have seen tremendous flexibility in their operations involving emerging markets.
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