United Kingdom

Retail Strategy 

Difficult trading conditions in retail mean it is an ongoing challenge to achieve strategic advantage in an increasingly aggressive marketplace.

Retail Strategy

Many retail businesses that expanded rapidly when the economy was growing are now struggling because they neglected to develop a strategic business plan incorporating different scenarios. Even those who did plan for uncertainty may not have incorporated the variables we have experienced recently. Few could have foreseen such a change in consumer behaviour, economic instability and challenging market conditions.

 

The current economic climate remains uncertain, and while many businesses have taken steps to ensure their survival, there is increasing pressure on the bottom line.


Review your business plan

 

You need to have an understanding of your customers, and be fully aware of who your competitors are and what their strategy is. Your strategy needs to adapt to the evolving needs of your customers. This includes considering your pricing strategy and buying channels. And most importantly, it means getting the execution right!

 

Cost efficiency

 

Success for retail businesses now and in the future will depend on an ability to maintain costs and supply chain efficiencies, as well as to source and/or create innovative products and business models in order to increase margins.


Investment in systems


IT investment also plays a significant role in both cost and strategic growth initiatives. Investment in IT systems for customer relationship management, enterprise resource planning, business intelligence and forecasting are all vital to your business plan. Mobile payments are evolving rapidly and changing the way consumers and businesses operate. Cross-sector partnerships and alliances will become increasingly crucial to operate successfully in this dynamic market. Are your current systems capable of supporting these initiatives?

 

Are you priced out of the market?

It would also be wise to review your pricing strategy. While most retailers understand that discounted price levels are not sustainable, they also recognise that discounting during the downturn has re-set the baseline for consumers, who are now unwilling to pay more. Competitive pricing, coupled with inflation and rising input costs, may leave you feeling squeezed from both sides. It is essential to understand your short and long term pricing strategies and their effect on your business.


Businesses who have offered ‘value’ promotions during the recession should be wary of how this may have affected the customer base; have you educated your customers to a level of value that they might not be able to maintain? Retailers may not be able to spot such shifts, as internal reporting systems are often too slow to recognise this until it is too late.


Understanding the underlying cost to serve is vital for creating a competitive and sustainable strategy. Business plans, growth projections and investments are all made on the basis of an accepted customer demographic and knowing what else those customers are likely to buy. If the actual demographic – and their spending patterns and power – has changed, then the consequences of this could be immense. Staying abreast of the factors you can control is critical.

 

How KPMG can help


At KPMG, we understand the issues the retail sector is facing and we work with a wide range of retailers to help them achieve competitive advantage and enhance shareholder value.


KPMG has expertise helping retail clients to assess their supply chain, advise on sustainability, discuss pricing strategies, and reshape their cost base. We can assist with key areas of your strategy and ensure that your business is prepared for short and long term challenges.

Contact

 

Tim CliffordTim Clifford

 

Partner, KPMG LLP (UK)

 

020 7694 8396

tim.clifford@kpmg.co.uk

 

Debt Advisory


Tim MetzgenTim Metzgen

 

Director, KPMG LLP (UK)

 

020 7311 4291
tim.metzgen@kpmg.co.uk