Retailers favour back-to basics strategies to drive growth: new survey
A new study has found that retailers across the world are increasingly opting for traditional back-to-basics strategies to drive growth instead of following newer business trends.
The Consumer Executive Top of Mind Survey by the Consumer Goods Forum and KPMG International found that 43% of businesses ranked sales growth among the top three levers for improving profitability over the next two years. This was followed closely by product innovation and cost reduction programs. However, IT transformation – a newer approach to ensuring profitability – only ranked in the top three growth levers for 19% of businesses.
The research also found that 48% of the businesses surveyed ranked product development as the highest priority in terms of R&D and innovation investment, with marketing following closely behind.
When it came to marketing strategies, brand building was ranked as the top strategy by 21% businesses, while pricing and consumer data analytics were both ranked highest by 13% of respondents.
However, online and mobile sales, social media and app development were all placed as much less of a priority. In all cases, traditional business tools were seen as holding the key to business growth over newer approaches.
The back- to-basics approach was also reflected in how retailers were seen to be maintaining and directing their focus explicitly back towards their customers. The survey revealed that businesses recognized the power and influence of today’s consumer, causing them to alter their focus to work with the customer and meet their needs, rather than trying to influence them.
An increase in informed consumers is expected to be the most positive impact on profitability for 64% of the businesses surveyed. Furthermore, one-third of retailers now expect to collaborate with consumers as a means of driving innovation. The survey suggests that for businesses, the old adage that the customer is always right is once again true.
Sabine Ritter, executive vice president at the CGF said: “The world of retail is always fluid, as technology evolves and demographic trends alter. What is interesting from this research, however, is that businesses are turning to tried and tested tactics to ensure they not only survive in this new climate, but grow in it. Perhaps the main conclusion to take from this research is that while new trends such as IT transformation are important, businesses still recognize the overriding need to have good products and low costs, all delivered with an unwavering focus on the customer. It is simple business, but appealing in today’s economic climate.”
Willy Kruh, global chair of consumer markets, KPMG International, added: “Globally, consumers have increasing access to technology and information and, as a result, are demanding more of everything. These consumer expectations, coupled with rising input prices, complex supply chains, regulation and competition, make it a challenge for many consumer companies to grow or even sustain margins. The results of this important survey explore the issues that are at the top of consumer executives’ agendas, and how their companies are navigating a complex and changing environment.”
The results of the study of 422 senior executives from countries around the world have been released to coincide with The Global Summit of The Consumer Goods Forum taking place in Tokyo this week.
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