In the latest Global Retail Trends 2020 report, KPMG's network of retail sector professionals indicates four accelerating trends that retail executives should be watching as they rebuild their business towards the post-COVID future.
Those four trends are an evolving retail business model, sense of purpose moving to the forefront, a rethink of the costs of doing business and placing customer choices under the microscope.
Within mainland China and Hong Kong, the pandemic proved that shoring up customer relationships may be key to staying afloat in a post-pandemic market. For most retailers, that meant leaning strongly into online sales, proving that speaking to customers and understanding their needs has become just as important as the bottom line.
While many physical stores will certainly return to growth in a post-COVID world, this crisis has clearly demonstrated that online platforms are quickly becoming the shopping malls of tomorrow, with the report predicting that, over the coming year, ongoing challenges with supply, demand and business continuity will force many retail groups to rethink their business models, which should spark a new wave of innovation and competition in the industry.
The onset of COVID-19 has put businesses' actions and their purpose under the spotlight as they retool their business models to support government response requirements. This year, the sector professionals expect retailers to focus on improving transparency, with the focus on helping society respond and recover from the current health crisis. It is also expected that leading retailers will move from having a purposeful brand promise to using their purpose as a guiding growth principle and decision-making lens.
In Hong Kong, the ongoing COVID-19 pandemic and its local resurgence has caused major disruptions for local retailers, causing many to rethink their future operating strategies. Ensuring business continuity during these turbulent times means developing a multi-faceted contingency plan. The importance of being able to manage demand fluctuation proved its worth early on in Hong Kong's pandemic, while other major cities around the world struggled with shortages of necessities to a much higher degree. Contingency plans need to be able to predict and adapt, particularly for retailers stocking essential goods or providing essential services.
The aggressive cost-containment strategies implemented in the midst of COVID-19 have shown retailers that they will need to go further if they hope to return their business to profitable growth. Retailers will increasingly need to leverage data and analytics to identify their most profitable stores, configurations and products, and based on this, make important decisions.
The COVID-19 pandemic has shifted customer expectations. Customers today care less about breadth of assortment and more about availability. The sector professionals thus predict that only two types of retailers will survive: those offering a limited yet curated selection and those offering unlimited selection. The report also expects retail leaders to think more clearly about their investments into three key areas: customer loyalty programs, customer data, and technologies aimed at making the shopping experience easier, safer and more efficient.