MAKING THE LEAP: Why and how brands should adapt to the future of retail
THE TERM "RETAIL APOCALYPSE" IS NOW A WIKIPEDIA ENTRY. HOWEVER, DESPITE THE DOOMSDAY HEARSAY, RETAIL IS FAR FROM DEAD. TOTAL RETAIL REVENUE CONTINUES TO GROW AROUND 4% YEAR OVER YEAR, AND 90 PERCENT OF WORLDWIDE RETAIL SALES ARE STILL DONE IN PHYSICAL STORES (DELOITTE INSIGHTS, 2018).
FOR THE EXCEPTIONAL BRANDS WHO CAN EMBRACE INNOVATION, DEVELOP A DIFFERENTIATED OFFERING, AND ADAPT QUICKLY TO MACRO TRENDS, THE EVOLVING RETAIL LANDSCAPE IS RIPE WITH OPPORTUNITY.
DIFFERENTIATE, AND DO IT NOW
Readers of The Lead Quarterly already know: the traditional retail model is largely failing. Consumer behavior and competitive pressures from digital giants like Amazon push hard against the decades-old model. More stores closed in 2017 than any other time in history on both a percentage and absolute basis. The S&P downgraded 75 retailers in 2017, and has downgraded a total of eleven retailers in 2018 so far. Of the companies covered by S&P, 34% have negative outlooks, meaning that they may be downgraded in the medium term (Marketwatch, March 2018).
But somehow, many brands are thriving. Specifically, brands differentiated in price or premium offering are opening stores and seeing significant revenue growth compared to their middle-of-the-road counterparts. The graphic below depicts these trends.
The Takeaway: differentiation by price or premium offering is key for survival in the new retail landscape. The question remains, how should brands aim to differentiate? There is no one-size-fits-all approach. Brands have to find their own unique voice (maybe literally, read on). But looking at the landscape of retail technology innovation, there are some clues on which way to point the compass.
In order to keep up with industry trends, the first step is to reimagine what it means to be a store in the twenty-first century.
Read the full article here.