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Retail Outlook 2021: Reshaping your business around your consumer

Drive growth through digital transformation, personalised experiences and omnichannel offerings

This year has shown how much consumer-facing businesses can accomplish in the face of adversity. 

We’ve seen organisations rapidly roll out new products or services, introduce new technologies and make huge changes to their business in response to the disruption brought by COVID-19. Some embraced significant reinvention, while others struggled to adapt and found themselves under greater pressure. 

To succeed in 2021, organisations should target sustainable growth by transforming and aligning strategy, purpose and insight, experience, operations, incentives and behaviours, underpinned by the right technologies.

What have we learned in 2020? 

1. Massive channel shift caused by the pandemic

It’s little surprise that the pandemic drove a significant channel shift, but even some of the most mature and strongest businesses struggled with both the speed of the change and its impact on channel economics.

As consumers embraced online, we saw explosive growth. It took just seven weeks for online penetration to increase from 20% to 30%. While this dropped slightly as non-essential stores re-opened, we expect online to continue to dominate. 

We also saw mobile shopping adoption accelerate. Our Global Consumer Insights Survey 2020 shows a 43% increase in consumers shopping on their mobiles since the outbreak began, with 93% telling us they intend to continue this habit post-pandemic.

2. Changes in consumer behaviour accelerated by the pandemic

How consumers learn about, interact with and buy from brands has changed. ‘Digital-first’ consumers are driving growth in online buying, whether directly from companies or through ecommerce marketplaces. Where Next for Retail? explores how some consumer trends have simply been accelerated, while forced experimentation has led to other, new behaviours sticking. 

When choosing products, consumers have become increasingly mindful of sustainability, health and wellness, and ethical considerations. That might mean looking to buy local or shifting to a goals-based approach, ranging from healthier living and ethical consumerism to greater convenience and stricter budgeting. Some are opting for smaller, newer brands that they consider more authentic and innovative. 

For CPG companies, retailers and trade partners have also changed. We’ve seen discounters take share from established players and physical retail channels consolidating, resulting in increasing trade margin pressures and a need to justify listings to retail partners.

3. Stores remain important, but how we use them has changed

We’ve also seen that there remains a role - and demand - for physical stores, more likely as part of an omnichannel offering. 

From the start of the pandemic, stores changed to meet consumers’ immediate needs, improving safety measures, bringing the store to the home, and offering alternative services. We even saw a drop in non-grocery online penetration as non-essential stores reopened following the first lockdown, as people looked to physical locations for experience and inspiration.

Elsewhere, Click & Collect was used as an important offering for certain logistics, consumers and non-essential retailers. Legally permitted during the second lockdown, it was a vital tool for some, allowing them to trade through enforced closures.

However, stores only accounted for around 30% of present shopping over Christmas 2020, a historical low. With pureplay retailers seeing huge growth throughout the Golden Quarter, retailers may need to rethink how they repurpose their store estate as part of any future growth strategy.

Actions to take in 2021

Think about the future of your store

Consumer businesses must rethink the economics of the store, and how it works as an integral part of any customer journey. That might be creating places that inspire, entertain and educate, while also fulfilling other operational and logistical needs.

How they embrace local high streets could be critical. Shopping locally is becoming increasingly important for people as they look to be part of a community. Our Appetite for Change report, for example, shows increasing weekly Google searches for 'local food and drink'. Some consumer business may benefit from demonstrating local and social responsibility, or enterprise in the community, but only where it is genuine. 

Those businesses that can successfully combine the digital and physical will drive responsible growth through a genuine, valuable omnichannel experience that balances the experience and theatre of buying in a physical location against the cost of overheads.

Drive digital transformation

Our recent CFO pulse survey showed that two-thirds of all companies say their revenue and profit will suffer if digital transformation doesn’t move fast enough.

To get ahead, companies need to develop a clear understanding and precise definition of what digital transformation means for them, as well as how they can make it a strategic investment priority. Done right, it will not only bring responsible growth but will offer an opportunity to strip out cost and reinvest that finance in other areas of the business.

With increasing numbers of consumers engaging with and buying through digital channels, companies with flexible capabilities and technologies will be best placed to win. Digital transformation should be top of the agenda for any large consumer-facing company. 

Our Digital Leap report looks at how consumer-facing businesses can start to close the gap between digital aspirations and achievements.

Prioritise personalised experience

The growing importance of omnichannel retail means customer experience between online and in-store needs to be seamless. Companies need to start using the data they have to create frictionless customer journeys across every touchpoint.

That starts with understanding the online buying journey for your consumers and how they get to the result. It’s no longer enough to just show them categories or products. Successful retailers will be those that inspire and guide customers towards the right purchase while providing certainty and reassurance around any anxieties, and a positive experience throughout the transaction. 

To give customers the personalised experience they now expect, businesses must invest in meaningful customer experiences, obsess about consumer needs and cultivate valuable engagement between the brand and individual.

Contact us

Nick Jarman

Partner, Private Sector, Front Office Transformation sponsor, PwC United Kingdom

Tel: +44 (0)7841 954037

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