High Performance Retail in times of uncertainty

One of the most certain things about being a retailer today is the uncertainty.

If the last few years have taught retailers anything, it is that they have to continually plan for the unexpected and how events can impact their businesses from nowhere. We have had a global pandemic, global lockdowns, economic consequences that have taken even the experts by surprise, geo-political events such as Ukraine and now the Middle East and across all of these, a confused, cash-strapped and worried consumer. 

The reality is, as so many retail CEOs have told me, is that they cannot do anything to influence these macro trends and pressures. But what it does mean is that they have to react, plan and prepare to make the business stronger and more capable of delivering sustainable growth.

At the end of last year, the World Retail Congress published its annual End of Year Review which brought together the views and opinions of retailers and industry experts on the impact of 2023 and their expectations for 2024. What was striking across many of the retailers’ comments and predictions is that there was an expectation that some of the economic pressures such as high inflation, wage rises and supply chain pressures would continue to ease. This appears to be continuing despite immediate concerns about supply chains going through the Red Sea.

However, despite the improvement in these cost pressures, the overall feeling amongst retailers is that the environment will continue to be highly competitive and that retailers will have to do even more to meet the needs of their customers who continue to face a cost-of-living crisis.

Writing in the End of Year Review, Ian Bailey the Managing Director of Kmart Group in Australia, predicted that 2024 will be about winners and losers. The winners are those that deliver the best value to their customers.

Easy to say, but as always, tough to deliver particularly when retail cost bases remain high and with the need for retail business models to change and adapt dramatically to meet today’s challenges.

This year’s theme for the 2024 World Retail Congress which is taking place in Paris on April 16-18th is High Performance Retail. It aims to capture the mood and focus of retail leaders around the world who have told us how they see their priorities in the face of these existential challenges and sector changes. Retailers have to double down and focus on what they can control within their businesses. It is about challenging and demanding from everyone and every department a continual drive for improvement and to question how to make incremental improvements in all areas. That way, a retailer can deliver the goal of sustainable growth and improving profitability when strong top-line sales growth is unlikely to return for a while.

A shining example of this approach is summed up by another retailer writing in our End of Year Review, Hajir Hajii, the CEO of one of Europe’s fastest growing retailers, Action. She writes that the mantra across the company is in “doing a little better every day”. Put another way, she says that they are not striving for perfection, but to make tangible improvements day by day. They are looking to grow Action “quickly but carefully” whilst “simultaneously improving our business”.

What will help retailers achieve this? Listening to some of the world’s very best retailers, it is clear that having a complete focus on the customer is paramount. Increasingly technology and data are making this easier but also extremely sophisticated. It explains why AI is exciting so many retail leaders because it will prove to be a powerful tool in helping get closer to the consumer.

Success will also come to those retailers that are taking bold steps and even risks in remodelling their businesses to deliver across all channels. The buzz phrase from last year’s World Retail Congress was undoubtedly “omnichannel” but however this evolves, the future really is about a retailer being able to offer services to consumers seamlessly across all channels. It is now an era where you have to disrupt or end up being disrupted.

Above all, retailing is about great, exciting and continual innovation – in product, in formats, in stores, in technology and in services. We heard some great retailers at last year’s Congress talk a lot about how they are giving renewed focus to creating great products that differentiate themselves and attract customers. What is certain in this age of uncertainty is that by the end of 2024, we will see even more clearly who the winners are, and that this will be driven by a pursuit of innovation and change.

Written by Ian McGarrigle, Chairman, World Retail Congress

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