The top 10 opportunities for retail sector
- Rising emerging market demand and rise of global middle class
The size of the global middle class is expected to triple between now and 2030. Yet 29% of retail sector respondents to our global survey reported that their efforts to enter these markets had yet to produce any positive results.
- New marketing channels and social media
Across the world, the number of people with regular access to the internet has increased dramatically. The retailers we surveyed were relatively likely to report that their company had at least begun to engage with social media — 28% said so, and a further 28% said social media was actively being investigated.
- Competitive differentiation via CSR and green branding
The global financial crisis, instead of shifting focus away from corporate social responsibility (CSR), seems to have made it more of a priority. Almost three in four companies in the retail sector consider CSR “as a must.”
- Multichannel approach
The growth of e-commerce and m-commerce, and recent rapid shifts in consumer behavior, have increased the benefits for retailers that can stay in touch with consumers through multiple channels.
- Demographic change
Demographic changes — aging and migration, for example — are leading to rapid growth in specific market segments. Individuals in developed countries are increasingly seeking to deny the aging process.
- Private label
The recent recession has increased sales of private label goods, and many consumers report they will remain loyal to these brands. Retailers have embraced this opportunity by introducing tiered brands for different income brackets and shopper needs.
- Launching new products and services
Consumer behavior is changing, and constant innovation of products and services from retailers is required as a result. Yet 23% of the retail executives in our survey mentioned that their organization has not been innovative enough.
- Global urbanization
As one panelist said, “The world’s population is undergoing a historic shift from rural to urban.” Higher consumer incomes and increased customer concentration will present considerable opportunities for the retail sector.
- Competitive differentiation via local branding
There are significant benefits to local sourcing of products; they are often healthier, fresher and more environmentally friendly. As one retail executive commented, “[T]here is a growing trend toward ‘solidarity’ with local regions that can provide brands with lots of consumer kudos.”
- Enhancing efficiency in the supply chain
The supply chain presents a significant opportunity for retailers to reduce inefficiencies and compete on cost, which is increasingly crucial as companies in low-growth consumer markets battle for market share.
The opportunity ladder presents a snapshot of the top 10 opportunities for the retail sector.
The ladder is divided into four sections, each representing the four drivers of competitive success identified in our Competing for growth research. Although this study focuses on corporate performance, there are still interesting comparisons and parallels to be made that are relevant for the retail sector.
- Customer reach — to optimize their potential market
- Operational agility — to maximize their effective response
- Cost competitiveness — to optimize their profitability
- Stakeholder confidence — to secure both talent and support for achieving their goals
Top of the Ladder: The opportunities at the top of the ladder are those that the commentators we interviewed thought would have the greatest impact on retail sector bodies’ performance in the years ahead.
Arrows: Arrows indicate whether the commentators thought the potential performance impact of the opportunity would rise or decline by 2013.