The Changing Landscape of Retail
The last three years have been a whirlwind for businesses. From the pandemic to the war in Ukraine and high inflation, these events have significantly impacted consumer behaviour, sending ripples through the retail sector. The industry is currently grappling with cost pressure, producer inflation, and ever-evolving customer demands and expectations. Costs are rising across the board, encompassing energy, heat, raw materials, and transportation. Simply passing on these increased costs to consumers or absorbing them entirely with margins is no longer a viable option. Therefore, businesses are actively seeking alternative solutions to navigate these challenges.
Facing the Informed Consumer
Retail remains the largest industrial ecosystem in the EU, accounting for a staggering 11.5% of its value added. It’s also the largest private employer, boasting nearly 30 million people across the region. This ecosystem comprises 5.5 million companies, with a remarkable 99% being SMEs. With a gross value added exceeding €1.4 billion, the retail ecosystem generates the highest value among all industrial ecosystems in the EU. The retail industry is adapting to a new breed of consumer – one who is becoming more cautious and seeks cost-effective solutions. However, these value-conscious consumers still prioritise high product and service standards while aiming to cut expenses. This translates to a focus on rational budget management, ecological practices, and convenient local shopping options. Customer experience remains a cornerstone for building effective loyalty in this evolving landscape.
Optimising for Success
Cost pressure is driving the search for optimisation methods that ensure store safety and usability. Continuous and efficient operation of the sales network is paramount in retail. Precise data analysis, a comprehensive understanding of the industry, and a keen eye for technical details are all crucial for success. Significant, eco-friendly savings can be achieved by optimising processes and ensuring the energy efficiency of facilities. Additionally, digitising processes like inventory management can eliminate human errors and further reduce costs.
“For years, Sescom has been working on improvements for retail networks. Our understanding of the inner workings of the retail industry, combined with the specialised knowledge of our experts, allows us to effectively support and optimise the technical maintenance of facilities. In recent years, we’ve developed an energy management service utilising proprietary telemetry systems introduced by Sescom Energy. We also assist our clients with the laborious process of inventory management. Thanks to RFID technology, asset management is now a quick, efficient, and transparent operation“- says Sescom President Sławomir Halbryt.
Automation in Action
Take, for instance, H&M, a global leader in fast fashion. They’ve implemented self-checkout registers in many stores, allowing customers to scan and pay for their purchases quickly and conveniently. This not only improves the customer experience but also reduces congestion at traditional checkout lines. Similarly, companies like Decathlon in the Netherlands are utilising RFID technology, allowing customers to place items in a basket that automatically scans them for purchase.
Data-Driven Personalisation
Consumers have become accustomed to a seamless shopping experience, both online and offline. Understanding their preferences and tailoring offerings accordingly is key to building brand loyalty. A prime example is Zalando, Europe’s largest online fashion platform. They’re renowned for their sophisticated data analytics and personalisation efforts. By leveraging customer data, Zalando curates personalised recommendations and targeted advertising, ensuring a more relevant shopping experience.
Customer-Centric Approach
Building positive customer experiences, such as comfort, time and cost savings, professional assistance, and advice, ensures that they stay with the network for longer. The product itself is also noteworthy – tailored to the customer’s needs, meeting multi-faceted expectations, and personalized.
E-commerce
E-commerce comes to the rescue, allowing manufacturers to operate more broadly, expanding internationally, and accelerating brand development and revenue diversification through expansion. This new sales channel is also a vast source of data on consumer behaviours and choices, which proves useful for designing offers tailored to the customer. Loyalty programs and artificial intelligence help draw conclusions and apply hyper-personalised advertisements. The online channel also provides an opportunity to reach customers already interested in a particular product or service.
Omnicommerce
The accelerated digitisation process allows for the effective combination of traditional and digital tools. Depending on the situation, consumers expect contact – both online and offline – tailored to their current needs. Within omnichannelity, traditional relationships with company representatives are supported by chatbots, voicebots, and artificial intelligence to ensure a harmonious brand presence in various sales channels. Furthermore, the omnicommerce strategy aims to create a consistent shopping experience regardless of where the customer interacts with a particular brand. Convenience of purchase, delivery time, and the possibility of returning or exchanging goods cannot be overlooked.
Conclusion
Cost pressure will undoubtedly continue to impact the retail segment this year. Nevertheless, it will not hinder the dynamic development of the industry. After the shocks brought about by the pandemic, war, and inflation, the retail sector is actively moving forward, investing in process optimisation, expanding e-commerce, strengthening sales channels, and personalising its offering. While challenges related to the European Green Deal and ESG standards are on the horizon, there is hope that the industry will successfully overcome them.
