Global retailers are becoming more cautious in their growth strategies amid increasing economic and geopolitical pressures. This is according to a new study by the World Retail Congress (WRC), Incisiv and Manhattan Associates.
The study was presented at this year’s WRC, which started yesterday in Berlin and runs until April 29th. According to the study, fewer than one in six retail managers are currently pursuing aggressive expansion. Most instead focus on cost control, operational efficiency and selective growth.
‘The certainty has disappeared…’
The research, based on data from 336 global C-level executives, shows a clear shift in priorities. This is especially true as the factors driving current market volatility become permanent disruptors rather than just short-term problems. “The certainty has disappeared,” the report says.
Of the CXOs surveyed, only 52 percent said they were expanding selectively. Only 35 percent said they were in “full defense mode.” External pressures such as geopolitical instability and trade disruptions were cited by over three-quarters of respondents as crucial to strategy design. 72 percent said that inflation and margin pressure are causing structural constraints.
In a statement, Ian McGarrigle, chairman of the WRC, said: “The operating environment for retail has fundamentally changed. Geopolitical instability and inflationary pressures are now the norm and shape the daily reality for businesses in all markets. Retailers must rethink how they grow, where they invest and how quickly they can respond.”
Persistent implementation gaps make targeted investments difficult
Investments are still taking place, but companies are taking a more targeted approach. They focus primarily on customer experience and personalization (72 percent), artificial intelligence (AI) and advanced technologies (58 percent), and supply chain capabilities (56 percent). Still, a remarkable seven in ten executives said they can’t move from decision to implementation as quickly as their competitors. This is due in large part to a persistent implementation gap.
When it comes to AI, CXOs saw both concerns and opportunities. 98 percent of executives were concerned that AI-powered search would reduce brand visibility. “AI begins to mediate the moment before a consumer reaches a branded touchpoint,” the report says. This underlines the importance of product data, content quality and digital presence.
The implementation of AI remains limited despite the high level of trust in the technology. Although 91 percent of CXOs expect AI to be standard by 2030, only 29 percent have the necessary data and technology foundations in place. The report identifies this gap as one of the key risks. “The organizations that are moving fastest in this environment are not those with the most sophisticated AI models or the most ambitious transformation plans. They are those with the operational infrastructure that enables them to act on AI’s insights.”
Shops will become the ‘anchor’ of trade in 2030
Roles are also evolving in stationary retail. 86 percent of executives still view business as essential to building customer relationships. 81 percent see them as the “anchor” of retail in 2030. The stores themselves are developing into centers for fulfillment, digital engagement and brand experience.
Commenting on the data, Katie Foote, senior vice president (SVP) and chief marketing officer (CMO) of Manhattan Associates, said: “As customer expectations rise, personalization is no longer a nice-to-have. Shoppers expect retailers to know them, anticipate their needs and deliver seamlessly across all channels. This only happens when retailers can apply AI to real-time data on inventory, orders and fulfillment.
“Unified commerce is what brings these pieces together, transforming AI from a promise into a connected experience that builds loyalty and drives profitable growth. This becomes even more important given current macroeconomic trends and the volatile global environment.”
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