Change seems to be the only constant for the retail sector, which is undergoing a major transformation owing to shifting consumer preferences. While the overall outlook for the sector has been rosy following a spectacular holiday season, retailers may still have some challenges to face.
Innovation is a key factor that drives the retail sector today. Retailers continue to seek ways to find a place in customers’ shopping carts by reinventing, reviving and refreshing their business models. Further, the phenomenal rise of Amazon (AMZN) and consolidation in the sector continue to be tough on retailers.
In 2017, the industry saw widespread closing of retail outlets, large number of bankruptcy filings and a few attention-grabbing acquisitions. Interestingly, we saw some big names like Wal-Mart (WMT) and Target (TGT) pursue the buyout of smaller e-commerce and direct-to-consumer brands to keep up with Amazon. Additionally, Amazon’s takeover of Whole Foods had been dominating the headlines last year. Also, grocer Albertsons Companies’ proposal to buy distressed drugstore retailer Rite Aid Corporation (RAD) is the latest M&A activity to pull focus.
Clearly, retailers’ mantra “Everything Everywhere” is here to stay. Companies are adapting to the changing retail landscape and investing heavily in digital commerce and omni-channel. Further, retailers taking a customer-centric approach, providing a sense of personalization to enhance customer experience, can help them stay ahead of the game.
Apart from these challenges, players in the sector continue to face economic bottlenecks like a relatively strong U.S. dollar, volatile commodity costs and global uncertainty. Additionally, natural calamities like hurricanes had a slight impact on the performance of retailers.
This clearly shows that the Retail-Wholesale sector is no longer a bed of roses. Some issues troubling the industry are elaborated below:
