A recent annual retail market overview released by Deloitte’s Consumer Industry Center highlights significant shifts in the retail landscape, driven by technological advancements and changing consumer behaviours. As retailers navigate this evolving environment marked by economic challenges, Deloitte concludes that many are on the precipice of a "make-or-break era—a reckoning of sorts."
The report describes a transition in the retail sector from a traditional supply-driven model towards an innovative data-driven, hyper-personalised experience for individual consumers. This shift from mass to micro strategies presents both opportunities and challenges. Deloitte notes, “Since the COVID-19 pandemic, the retail industry has been moving into a digitized future”, yet highlights that the high costs associated with transforming legacy systems and business models have made this transition complex.
Key challenges identified in the report include fragmented consumer bases, declining sales volumes, ongoing supply chain disruptions, rising operational costs, and the burdens of outdated technologies, collectively contributing to a precarious situation for many retailers. Despite these hurdles, the potential for transformation remains, particularly through ongoing automation and technological enhancements, especially in the field of artificial intelligence.
Deloitte indicates that generative artificial intelligence is emerging as a significant resource for retailers. The report reveals that those who implemented generative AI tools, such as chatbots, reported a 15% improvement in conversion rates during the Black Friday shopping period. Furthermore, six out of ten retail buyers noted that AI-enabled tools positively impacted demand forecasting and inventory management for 2024. Looking ahead, the report suggests that with increasing digital efficiencies, 2025 could herald substantial advancements in critical sectors including merchandising, supply chains, and marketing.
According to a survey incorporated into the report, about 70% of retail executives anticipate integrating AI capabilities within the coming year to enhance the personalization of customer experiences. This optimistic outlook is further reinforced as executives predict a modest industry growth of mid-single digits on average for 2025. Retail leaders identify key growth opportunities such as bolstering loyalty programmes, enhancing digital commerce, and improving omnichannel strategies. These avenues are crucial for creating a comprehensive, seamless, and personalised experience for consumers.
Deloitte’s analysis identifies three significant trends shaping the retail industry and promoting greater efficiency: engaging the value-seeking consumer, unlocking omnichannel capabilities, and mastering the transition from mass to micro strategies. As the retail sector adapts and optimises its operations, the potential for enhanced business practices through emerging technologies remains promising.
Source: Noah Wire Services