New Year, new opportunities in retail

At the start of the year, let’s begin on a more positive note and analyse what the retail news is hinting at – what would be some of the main differentiating points in 2020 that could relieve some pressure for the troubled sector and which from those are some of the big industry names choosing to be their New Year’s resolutions.

Our first story is based on one of the cornerstones of any balanced 4P-based marketing mix – product and how a retailer differentiates it from the myriad of alternatives available. While it is debatable whether the traditional UK retailers can win the pricing war with the discounters and maintain profitable operations, Tesco has started venturing on another front with the objective to convince customers its products offer something different and value-add to justify the price difference. The largest supermarket in the UK is trying to capitalise on the growing plant-based food trend by investing in its own plant-based brands and heavily promoting independent brands alongside its own in stores. Going down such a route has significant implications on brand image and store operations, but what Tesco seems to be relying on is combining market and customer trends to come up with a unique differentiating point for its offer. Will its plant-based bet fend off the discounter threat and bring in more from the growing base of environmentally-conscious customers – keep an eye on this in 2020.

Continuing with the sustainability theme but with a slightly different interpretation, Sainsbury’s has joined the likes of Tesco and Co-op by pledging to completely erase its net carbon emissions by 2040. To achieve this target and boost the CSR image of its brand, the retailer is pledging to spend £1 billion, but critics were quick to point that these aspirations will cover only emissions from Sainsbury’s direct ops – heating and lighting. Nonetheless, it again shows how the ever-growing sustainability trend can influence strategic decisions – it was a driving force in 2019 and it doesn’t seem likely it will decelerate its advance into corporate agendas in 2020. It is even influencing product ranges with some getting removed or altered purely because of potential environmental damage and societal backlash – like Selfridges recently removing all plastic-based cosmetic glitter from its offer.

Finally, let’s look at a different approach some retailers might consider as the right way to set their business apart during the year. Frictionless omnichannel customer engagement has long been hailed as the holy grail for retail or any customer-facing business. However, it has become clear that it will be no easy task to achieve the required switch in technological capabilities, operations and cultural mindset in order to achieve this. Legacy infrastructure and deeply embedded ways of working seem to be hindering the type of innovation agility and pace required to overcome the current patchy way of improving customer experiences. But fear not – a new  retail-as-a-service platform approach is promising to usher a new age in retail. And it has been the cornerstone for the success of none other than one of the main causes of traditional retailers’ woes – Amazon and other retail technology disruptors. This approach designs and streamlines traditional store and commerce retail functions as microservices on a cloud-native architecture to be offered to different parts of the business greatly improving their ability to innovate and eliminating costly duplicative on-premise builds.

Giving full control to retailers of how they design, test and deploy innovation, an RaaS platform holds great potential to evolve retail to something beyond its traditional offer – something more akin to “an end-to-end retail and other relevant products and services” value proposition. Such an approach is especially relevant to multi-brand businesses seeking to optimise their operations while at the same time not sacrificing agility and pace required to react to the turbulent retail environment. A hugely promising idea and one to further explore in 2020!

Author

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Stoyan Petrov

Senior Consultant,  Customer Engagement