Plummeting profits, shrinking margins and eroding customer loyalty – being a retailer nowadays requires lots of pluck. And while most retailers fully realize the need to change to be able to compete in this disruptive environment, they are often clueless as to how adapt to a new reality.

Among disruptive forces currently shaping the food retail industry are discounters who put pressure on pricing, skyrocketing obesity figures, consumers’ growing concerns about the environment, not to mention the power of Internet. To keep their heads above the water, retailers must completely redesign their strategies.

Troubled sector?

For 83 percent of respondents, shopper understanding and engagement remains a key challenge, reveals the survey by Cosaris, while 61 percent find it difficult to develop new business concepts. 54 percent of those surveyed indicate profitability as the major problem. Evolving social values and digital revolution were a source of grave concern for over 33 percent of the survey’s participants. Retailers are aware of the issues, but find it hard to cope with them. According to the survey, the top three areas for improvement for grocery retailers include shopper focus (indicated by 82 percent of respondents), social and environmental responsibility (63 percent) and organisation efficiency (45 percent). Interestingly, just 26 percent of those surveyed feel that their business model must be changed.

Ten steps to success

In its study, Cosaris identified the key capabilities that are critical to successful transition. The fundamental and first key area retailers must focus on is the shopper. There are ten crucial dimensions linked to the shopper and requiring retailer’s attention, among them experience and education (shoppers want to see how food is prepared and learn about its origins), health (shoppers want food that is healthy, fresh and easy), social and environmental responsibility, technology and innovation (shoppers want innovation that supports and enhances their shopping experience), online (shoppers want a seamless experience that is an extension of a bricks and mortar store) and employees (shoppers appreciate friendly, helpful, skilled and well-informed employees).

Ditching defunct business models

The whole industry will begin to change as soon as key business players acknowledge that their currently applied business models became obsolete. According to the study, only 45 percent of business leaders embrace the change and are willing to rethink their business models, with a worrying 66 percent zeroing in on efficiency and price alone. Sadly, doing business with a continued focus on price, and nothing but the price, cannot be sustained in the long run. It’s rather simple: there will always be a cheaper option available to consumers. Competing for client’s attention must go beyond showering shoppers with discounts. Instead, placing the consumer in the centre of the business model, while paying attention to a range of key areas is the first step towards positive transition.

Source: cosaris.com