Deloitte: Six steps to ensure retail success in 2020
Deloitte advises retailers to stress factors including convenience and digital enablement in the coming year.
In its new 2020 retail industry outlook, Deloitte outlines a number of key trends retailers can expect over the next 12 months, with calls to action to best respond to them. Following is a brief review of six critical steps Deloitte recommends retailers should follow in 2020.
1. Make it convenient. With the convergence of supply chain, digital technologies, and other innovations, Deloitte says convenience is becoming a much more important piece of the equation. In response, retailers should adopt “smart merchandising” strategies, such as creating “micro-brands” aligned to specific lifestyle needs of shoppers and augmenting product availablie with resale.
2. Prepare for economic change. Although personal consumption growth has been steady, on average, Deloitte warns retailers that tariffs present global economic uncertainty. In addition, wage growth has not risen proportionately with job growth and the impact of the 2017 tax cuts is fading. Retailers should be ready for consumer spending to rise 2.2% in 2020, down from the 2.5% increase of 2019.
3. Differentiate with marketing. While the quality of the product is still important, Deloitte advises that the point of differentiation between retailers is now often dependent on their ability to market the service, delivery, and overall convenience that they provide. Things like same-day delivery, curbside pickup, and buy online/pick up in-store have become table stakes. The competitive advantage is derived from presenting these components more effectively than the competition does, according to Deloitte.
4. Digitally enable the enterprise. A personalized experience, highly interactive engagement, and convenience in all shapes and forms require superior digital capabilities, says Deloitte. Therefore, in 2020 retailers need to consider implementing leading-edge technologies such as augmented reality (AR), virtual reality (VR), and 5G network technology anywhere in the enterprise they can help improve operational efficiency or enhance the customer experience.
5. Create the “store of the future” – now. Retailers must provide the type of brick-and-mortar experience modern customers desire. This can include localized inventories, in-store automation, and equipping associates with concierge apps that combine real-time online access to products and information with human customer service.
6. Invest in a returns strategy, not policy. As more retailers use their physical stores to accept online returns, Deloitte reminds them that cost is an important factor to keep in mind. Emerging retail models such as direct-to-consumer and subscription services and rental businesses are built to consume high volumes of returns as a part of their supply chains; anticipating returns with high predictability data helps with inventory strategy. To thrive in reverse logistics, retailers should move from return policies into return strategies, which may require altering their supply chain model.