Will retailers sink or swim in the current retail environment? We take a look at the current retail outlook.
The state of retail has been heavily publicized, with the “retail apocalypse” affecting retail establishments that are household names. The term “retail apocalypse” was mentioned a whopping 6,809 times in new articles in 2017 (we just added two more!) and store closures continued to occupy the media spotlight.
The Changing Format of Retail
While some experts point to retail shrinking, the reality is that the format is just merely changing. Expectations for online sales are across the board optimistic, although there is difference in opinion among retail executives when considering the role of e-Commerce in the broader sales picture.
For many years online sales platforms have been gaining traction, but 2017 was a record-breaking year for e-Commerce sales. While sales surge, retailers surveyed are divided on what their plans are to devote dollars to e-Commerce efforts with 51 percent of executives stating they intend to invest more capital in e-Commerce and Mobile Commerce for 2018.
Customer Relationships are the Key to Brand Success
To stay in the black, retailers must work hard to build lasting relationships with target customers, which requires a deep understanding of customer expectations, preferences and grievances that drive behavior.
Savvy retailers cater to their unique shopper profile. While a Wal-Mart shopper is more deliberate in looking to fulfill their shopping needs at the lowest possible price, Wal-Mart’s “everyday low prices” strategy is leveraged by scale, volume and only the essentials in operating expenses. Demonstrating empathy by delivering what the customer desires is key to long-term survival.
Connectivity and Engagement Investments Are High Priority
Retailers are dedicating resources to up the ante in customer engagement and tech infrastructure to support the ever-changing retail landscape. With capable IT systems and personalized marketing efforts, this is the recipe for meaningful customer feedback and predictive insights that retailers must consider when making business decisions.
Many retailers are planning on experimenting with innovative digital transformation initiatives in 2018. The future of connected in-store technology, as we’ve seen with Amazon Go, eliminates all factors that currently add friction to the current shopping climate. Connected in-store technology can eliminate checkout lines, payment, and all human interaction altogether should that be what the customer truly desires. While Amazon had the advantage of building a store around this concept from the ground up, there are steps that traditional retailers can make to transform digitally.
Retail Regulations and GDPR
As we continue to roll along into 2018. Many retailers are eyeing the European Union’s General Data Protection Regulation (GDPR) impending deadline of May 25th. The consequences of noncompliance with GDPR are quite severe, and retailers cannot afford to harmonize with the data privacy laws that will soon regulate citizens of the European Union. Retailers whose customer data is affected by a breach in privacy by a hack can face fines of up to £20 million or 4 percent of global turnover, whichever is greater.
Data protection is not that only spot where regulators are cracking down. Retailers are also getting ready to implement the Financial Accounting Standards Board guidance on lease accounting. It’s important for business leaders to familiarize themselves with all of the new standards and regulations and evaluate the impacts on their business.