Kostya Polyakov
Partner & National Industry Leader, Consumer & Retail, KPMG in Canada
The COVID-19 pandemic has rocked the world of retail, and adapting quickly will be crucial for firms to stay competitive. Here’s how retailers can succeed in the current environment.
On the surface, pandemic-era changes to the world of retail may seem unprecedented. However, many of these changes were underway well before COVID-19 — the pandemic merely accelerated their approach. But since rolling lockdowns continue to place extraordinary pressure on retailers, companies are having to grapple with seismic shifts years ahead of schedule.
For savvy retailers willing to adapt, these shifts present an enormous opportunity. KPMG’s retail professionals have a lot to share around what they’re doing to help their retail clients and what it takes to deal with the current market shifts.
From retail to consumer commerce
What it means to be a retailer is changing, and embracing the shift will be key for firms looking to stay relevant in the future. Despite the long-looming advance of digitization, many retailers have relied on baby boomers to continue shopping in-store. Now, this demographic is shopping online just like its younger counterparts, presenting a massive opportunity for savvy retailers. Meanwhile, an increased pressure on household finances is making consumers more value- and convenience-conscious than ever.
Safety and security, both in the physical and digital realms, are also at the forefront of consumer concerns for the first time. Finally, as the pandemic brings certain social and political issues to light, shoppers demonstrate an increasing preference for purpose-driven brands with clearly-stated values.
“Retail is becoming a customer-centric industry in a new way,” says Kostya Polyakov, Partner and National Industry Leader, Consumer and Retail at KPMG in Canada. “A traditional retail approach was focused on having inventory that was in demand. Now, it has shifted significantly to the customer.”
To be successful in today’s world, you need strategies driven by consumer insights — what customers want and how they want to buy, when they want to buy, and what they want that purchase to mean in the broader context of society.
“The better you are at using insight and data to understand what and how your customers want to transact with you, the more successful you’ll be.”
Retailers of the future will occupy one of three categories
According to insights from KPMG, the retailers of the future will fall into one of three major categories — platform ecosystems, omni-channel, and specialists/mutuals and independents — or occupy more than one at the same time. “Retailers in today’s market must be omni-channel, meaning the customer has to be able to choose how they interact with you,” says Polyakov. In practice, that means having both a physical and digital presence, and making the combination as seamless as possible.
“You also need to think about how you fit into the platform ecosystem,” says Polyakov. “Are you part of one? Should you become one? Can you compete with them?” It’s no coincidence that the 10 biggest companies in the world by market capitalization are platform players1. Alternatively, consumers will turn to smaller, niche-focused specialists with laser-focused expertise in a given area.
“Most importantly, you have to be nimble and willing to change, and we’ve defined eight key capabilities to help retailers navigate the transition into the consumer commerce realm,” says Polyakov. Of course, having a roadmap to effective transformation doesn’t hurt, since major operational shifts can be a complex affair — especially for larger firms. Retailers will need to think about which business model will best set them apart from their competitors and position them for success. The foundations of the connected enterprise model are designed with the customer in mind when it comes to digitally transforming and connecting the front, middle, and back offices.
Eight capabilities, twice the impact
Given the factors described above, access to data-driven insights is a key thing to look for. “We help you become a connected enterprise, identifying both your existing strengths and areas you need help with, and working on the latter together,” says Polyakov. “We have specialists in every area of retail, from supply chain to e-commerce, and we work with clients every step of the way to help them invest in the eight capabilities that enable organization-wide digital transformation.”
The market is changing, and the foundations of a winning business model are changing too. It’s time to define your business model, design a roadmap to success, test and pilot your strategy, and finally, implement through the front, middle, and back offices.
[1] Source: The future of retail, February 2021, KPMG International.
