Challenging market condition are forcing retailers to rethink their growth strategies as new research reveals most brick-and-mortar retailers and department stores are at risk due to their slowness to innovate or adapt to changing consumer behaviour.
Following mixed results over the 2017 Christmas trading period, weak sales and administration announcements, rumours of potential collapses and news of store closures have become a recurring theme since the start of the year.
While all retailers are being challenged by the changing market conditions, low consumer confidence, a weak pound and technological disruption are resulting in brick and mortar retailers being most at risk.
Poundworld and Carpetright are the latest retailers to announce store closures and CVA plans.
According to the BBC, around 650 shops and restaurants have either shut down since the start of the year, or are at risk of closure, hence the need to reconsider growth strategies.
A recent survey by Accenture found that 71% of retailers globally believe that their current growth strategy is at high risk of disruption, and only 23% are very confident that they will achieve their 2020 projected targets.
While brick-and-mortar face challenges due to their slowness to innovate, e-commerce retailers are at risk too. While online sales continue to grow at steady pace, online-only retailers face challenges around scale, speed and cost of delivery, and fulfilment.
Some of the way retailers are currently trying to ignite growth include partnerships and acquisitions.
Recently, Next has partnered with Rockar, omnichannel vehicle retail specialist, to sell cars in Next stores at the Manchester Arndale shopping centre. IKEA also recently announced partnering with TaskRabbit to give customers an easy furniture assembly service. These partnerships demonstrate how retailers are rethinking the customer proposition.
Acquisition of smaller digital players will also be a path of growth for some retailers according to the Accenture report. Retailers can improve their competitive agility as they benefit from cutting-edge technologies that they don’t currently possess, such as access to new customers, as well as a new and diverse talent pool.
According to Accenture’s research, 82% of retailers globally said that they have either acquired or have considered acquiring a digital company in the past two years and over a third globally have completed five or more digital acquisitions in the same period.