INDUSTRY RESEARCH: IS RETAIL APOCALYPSE NEAR?
By Nayan KurupWhile news about one more retail store closing has become a routine, there is a hidden trend emerging that tells us a different story. Read on more.
Good Times
World economy today is booming. The consumer confidence index for May 2018 stands at 128 and the last time it saw this figure was way back in the year 2000. Although this data only reflects consumer sentiments in America, it is a good indication of how the world feels today.
Apart from the 1960 s and the turn of the century in the year 2000, America and the world is feeling confident once again. Lynn Franco, Director of Economic Indicators at The Conference Board said:
Overall, confidence levels remain at historically strong levels and should continue to support solid consumer spending in the near-term
Strong consumer spending has a direct impact on the Retail Sector. With larger brands transforming with their online presence apart from the brick-and-mortar stores, consumers expectations are at an all-time high. Add to this digital revolution and there is every reason for the consumer to feel ecstatic.
With lowering unemployment rates across the world and increasing incomes, the retail industry could start feeling happy once again.
Retail Apocalypse
Having said that, is our retail industry willing to accept that times are changing? Maybe not.
Today, while some quick learners and fast movers are adopting cutting edge technologies like IoT (Internet-Of-Things) and video analytics to keep a track of inventory and analyze customer behavior, some from the industry still continue to have the same pain points as they had 20 years ago with inventory management and stock tracking. They do not yet see value to adopt emerging technologies.
And there is a reason for it. There are not enough change agents in the market who can help organizations extract real value from these emerging technologies. There are a lot of technology people, and then there are a lot of business people. What industry really need is a change agent that understands nitty-gritty of emerging technologies, and help businesses transform by transforming a business process that has been a bottleneck for years.
Consider this, as per a report from FGRT, in 2018, 4,095 stores have shut shop.
This after a wave of retail bankruptcies during 2017 in the US (7,000 stores closed, which was 200% more than the previous year). Some of the prominent names that closed operations include, Claire s, The Limited (closed remaining 250 stores Jan in 17), Toys R Us (closed all stores in Sept 17), Wet Seal (Feb 17) and Payless Shoes, Gymboree, Rue21 to name a few.
If consumer confidence is at a high, wages are increasing, the stock markets are surging, why are retail stores shutting down?
A lot of people are blaming Amazon and other e-stores for the retail apocalypse. It is rather convenient to do so, however has the Amazon phenomenon hit us just yesterday? Off course not. Have we failed to change and adopt to technology? Probably yes.
But, this is just other side of the coin. In reality, it is a consolidation of business, and not just retail apocalypse.
Let us see how one of the largest retail companies in the UK has managed to report profit with some store statistics.
Let us start from noting the store growth from 2011 until 2017. Following are the statistics for Tesco:
A trend is clearly visible. It is prudent to focus on growth that is backed by right information, consumer spends, costs, and analytics, rather than just following the industry leader and growing just by opening stores.
While Tesco s store growth started falling significantly since 2012-2013, the process finally resulted in profitability. Tesco reported profit of £1.2Bn, meaning company reported its first full year growth since 2009/2010. This really tells us something more than we can just read in news.
As sighted in news article published in independent
https://www.independent.co.uk/news/business/news/tesco-reuslts-earnings-128bn-annual-profit-first-full-year-growth-since-2010-booker-a7679401.html
They have simpler range, and service & product availability has never been better.Their food quality perception is at its highest level since the last 5 years. They have generated more cash, increased profits, and reduced debt.
Look at Consumer spending in grocery stores in Great Britain Q1 2015 to Q1 2017, by brand:
More than just numbers
These are more than just numbers, and this story has deeper insights. Having lived in UK, and its smaller towns, I have seen how Tesco approaches a new region. Just one extra large store, with 24/7 small units on fuel pumps.
These insights can be derived if organizations are ready to adapt technology, use analytics to get more meaningful data points, try to identify bottlenecks, and improve inventory & customer reach via tracking assets & gathering preferences.
What else could be done so that retail companies learn to transform their business? We have a few ideas in the following areas:
Point of Sales Analytics
IoT Enabled Smart Service Solutions
Asset Tracking Solutions
In Store Consumer Analytics
Inventory Management & Smart Shelf Solutions
Advanced Analytics – Predictive Analytics
Blockchain Extensions
About Cassini
We are technology adoption partners who help organizations identify pain areas, bottlenecks, and eliminate process inefficiencies with our deep functional expertise. This skill duly supported with our UI/UX capabilities, helps us make ERP systems functionally complete, and yet fun to work with.
Feel free to write to us at support@cassinitech.com and we would love to get on a call with you along with our industry experts and technology specialists.
References:
www.conference-board.org
www.advisorperspectives.com
www.money.cnn.com
https://www.independent.co.uk/
https://www.statista.com/statistics/300672/grocery-store-spending-in-great-britain/
Photo Credits:
www.bls.gov/
www.fungglobalretailtech.com
www.statista.com
https://pixabay.com/en/users/Alexas_Fotos-686414/
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