The distribution is a key stake of retailing sector

BearingPoint as the partner of the ESCP “Retailing 4.0" Chair is committed to contributing to building bridges between the academic world and companies. As part of this engagement, the BearingPoint Retail, Luxury and CPG team mentored the writing of a series of articles of ESCP MSc students and shared insights on major retail stakes. Enjoy your reading!

What businesses in the retail sector in 2030?

Retail is nowadays changing at an unprecedented speed, and with it come big challenges and opportunities. What key trends will shape the world of retail in 2030, and are there any jobs creating or disappearing in 2030 because of those new trends? This article aims at examining the trends that will impact the business activities both in the back and in the front office of retailers.

The distribution is a key stake of retailing sector

Regarding activities and players in the retailing sector, when talking about retailing, we are talking about both back end and front end that include 4 players: manufacturers, wholesalers or distributors, retailers and customers.

During the retailing process, the distribution is the key stake. A good distribution system quite simply means the company has greater chance of selling its products than its competitors. The company that spreads its products wider and faster into the marketplace at lower costs than its competitors will make greater margins.

Moving on, although digitalization and innovation are what has forced retailers to be faster everyday, new technologies such as Radio Frequency Identification (RFID) have also brought many new opportunities to the industry. Since the development of RFID chips, big retailers have been using them mainly for stock management - to get real- time stock information; security and asset tracking - to prevent theft and to make sure that products are always in the right place; cashless payments and self-checkouts - to avoid long queues and waiting times; and supply chain - to track shipments for delivery. Decathlon for example put tags with RFID technology on all of its items in stores, so that customers can pay faster by using self-checkouts. In the future RFID is to be even more explored and new technologies, shaping the retail industry are going to be created (Business Matters, 2020).

56% of consumers are willing to pay 35% more for sustainable brands (IBM Study, January 2020)

Moreover, a big trend that has developed over the recent years and is an ongoing trend, changing the retailing sector, is definitely sustainability and transparency. For customers it is important that companies are rather purpose driven than product driven. In all retail industries, customers care about the way certain products are made, how transparent the brands are, if the wages are fair, etc. For example, this year's IBM Study, conducted on 19 000 consumers within 28 countries, shows that 56% of consumers are willing to pay 35% more for sustainable brands (IBM Study, January 2020). With the help of apps such as Yuka, customers can now get instantly clear information on the products’ ingredients and their impact on the health and the environment. But it is not only about transparency in terms of technology, but rather about gaining consumer trust. Fleury Michon, a French cured meat manufacturer, is one of the companies that understood this well. They showed their customers that there is nothing to hide by allowing them to visit Fleury Michon factories every year. More and more companies started to invest in sustainability and brand’s transparency as it resulted to be very cost friendly and beneficial for a company in the long-run. Another good example is Patagonia, that noticed that the more sustainable they go, the more profitable they are (Sonsev, 2019).

Authors: Julie Lartigue, Emilie Ramon, Romane Isler, Domitille Sebaux, Qingyue Tan, Mark Esser, Zala Plibersek

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