Retail Channels Our experts provide analysis on the retail industry, featuring insights from a local to global level on where and how consumers will shop across both traditional and emerging retail channels.

How Retailers Need to Adapt Their Strategies to Changing Consumer Preferences

6/22/2022
Marija Milasevic Profile Picture
Marija Milasevic Bio
Share:

High inflation rates, post-pandemic changes, the war in Ukraine, growing commodity prices, new consumer values and preferences are impacting retailers’ performances across the globe. Retailers are using various strategies to remain relevant in a current turbulent world - from changing perceptions of convenience, evolving stores to digital transformation and sustainability questions, in order to overcome the risks and challenges and continue expanding.

Rationality will be the key for future retailing consumers

Consumers are looking to manage their spending even more carefully, not necessarily buying cheaper, but rather buying the best they can afford. Among businesses, there is now an even greater focus on value creation and ensuring the affordability of products. As a result, discounters is the fastest-growing grocery channel across the globe, with its leaders Aldi and Lidl actively expanding to new countries and regions. Discounters has evolved during the last decade - changing the perception from low price and poor-quality products to stores with convenient locations and the best value-to-quality ratio. Based on Euromonitor International’s Voice of the Consumer: Lifestyle Survey, consumers across all age groups have become less likely to spend time trying to find bargains since 2016. Rather, they prefer trusted store brands that offer value for money at acceptable quality.

image7fqra.pngInternational players expand their presence

Over the five-year period of 2016 to 2021, retailing has experienced a consolidation process. The value share of the top 10 global leading retailers increased by five percentage points, rising from 11% to 16%. Due to economies of scale, major players can offer more competitive prices to consumers in addition to having a more positive impact on suppliers. International well-established names - notably Walmart, Amazon and Alibaba - significantly strengthened their positions during the last two years. Emerging markets remain less important for the largest global retailers; however, the share of emerging markets in certain retailer portfolios is growing. Carrefour, for example, has a strong presence in Eastern Europe and Latin America. In recent years, the company's share in emerging markets has grown rapidly on the back of balance between international brands and local ones. Carrefour is successful in establishing contacts in local markets in terms of supply, as well as online development. Many retailers find it challenging to expand to new countries and regions, especially to emerging and developing countries.

Changing concept of sustainability

Consumers have become increasingly powerful influencers of companies’ solutions and strategies. One such area of interest is sustainability. Based on Euromonitor International’s Voice of the Consumer: Lifestyle Survey, 58% of respondents believe they can make a difference through their everyday choices and actions in 2022, up 13 percentage points from 2015. Initiative coming from consumers is forcing retailers to change their strategies to adapt to the new reality. Prior to the pandemic, most retailers defined sustainability as reducing environmental impact. However, the pandemic also highlighted the importance of social responsibility. There is a growing number of new concepts and solutions by retailers targeting different areas of sustainable approach. Several examples from different areas include: Vinted – a second-hand platform with more than 50 million users; Bundlee – a childrenswear rental service: and Rewe Group, which explores urban farming in a sustainability push.

Driven by digital shifts, omnichannel becomes essential

Retailers are shifting their long-term priorities to embrace technology and new business models. Future retail will be shaped by having an omnichannel presence. This is a priority for retailers during the next 12 months - 62% plan to develop an omnichannel strategy, based on Euromonitor International’s Voice of the Industry: Retailing Survey, 2021. For retailers, an omnichannel approach helps to retain consumers and increase profits while allowing companies to collect customer data through various communication channels. This helps to provide personalised offers and ensure convenient service and loyalty.

Offline to increasingly enhance consumer experience

Offline stores are becoming the centre of experience and engagement with customers, rather than just selling space. The store of the future will not only require a change in format, but retailers will also evolve to create new in-store shopping journeys to better cater for the post-pandemic shopper. After two years of consumers attempting to avoid crowds, retailers are now placing bets that the global consumer will demand an enhanced technology-driven, in-store experience that is seamless and streamlined and with a stronger integration with the online channel, where they might start, or end, said purchase.

In terms of in-store changes, based on Euromonitor International’s Voice of the Industry: Retailing Survey, 2021, global retailers plan to implement the following: to devote more space for digital fulfilment; to shift or open more experiential formats; reduce in-store inventory; open pop-up or modular stores; or develop micro-fulfilment platforms.

imageb8ici.png

Various factors from price changes and logistics issues, to sustainability and omnichannel presence are increasingly influencing retailers’ strategies. To remain competitive, businesses need to be flexible and invest in understanding trends and consumer preferences.

For further insight and analysis into retailers’ strategies across the globe, please refer to Competitor Strategies in Retailing.

Interested in more insights? Subscribe to our content

Shop Our Reports

Retailer Corporate Strategies in Marketplaces

In the current challenging economic environment defined by supply chain bottlenecks, high inflation, price sensitivity and increasing expectations from…

View Report

Retailer Corporate Strategies in Private Label

Although the current inflationary environment poses many challenges to retailers, it also provides a unique opportunity for retailers to attract new customers…

View Report

Competitor Strategies in Retailing

COVID-19 influenced changes in consumer behaviour. Accelerated digital transformation impacted all areas of retailing, starting from supply and logistics and…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More