It takes bravery to be disruptive

The world of retail is being continuously disrupted; whether it be from new technologies, changes to regulation, or the ever-evolving needs of the consumer (see Disrupters). This rapid change offers opportunities for retailers with fresh ideas to change the game in the quest for growth.

In a recent research paper, KPMG Boxwood explored this in more depth and concluded there were three key areas in which retailers can differentiate: value, experience and convenience.

Value players have responded by coming up with innovative ways to inject new demand into long-established sectors such as grocery. But value alone is not enough to sustain growth. In addition to effective pricing, value retailers need to appeal in other ways. Aldi, for example, has taken steps to remove synthetic colours, transfats and MSG from its private brands.

As for experience, shoppers emerged from the recession with more power, choice and information than ever and, as such, have higher expectations of retailers. In response, retailers are exploiting the ‘theatre of the store’ - sights, smells and experiences that cannot be replicated online. Consumers are lured into Lush shops by their trademark scent, and, inside, the bright colours of the products don’t disappoint.

Finally, convenience is key. Consumers now expect a seamless ‘anytime, anyhow, anywhere’ shopping experience. The recent tie-up between Morrisons and Amazon illustrates the growing importance of this. Amazon will be using smaller satellite warehouses and its own fulfilment team to enable same-day delivery.

Technology clearly has a fundamental part to play here as the lines between (traditional) retail and technological solutions blur. Drones that are today spraying farms in Japan, for example, could very well be the perfect delivery solution in India.

Consumers’ needs are changing fast, providing retailers with both challenges and opportunities for generating growth. Long-established retailers can win here if they are agile enough, but businesses wanting to be at the forefront, rather than laggards to the disruptors, need to be brave with pilots, trials and experimentation.

Liz Claydon is KPMG’s UK head of consumer markets