RetailX’s The Year in Data report sees our experts offer their perspectives on internet retailing in 2023. Ahead of its launch, Jonathan Wright considers the lessons of RetailX’s regional and country reports – highlighting that a balance between consolidation and being nimble enough must be struck in order to make the most of new opportunities.
Digitally driven retail is becoming a mature industry, which is a scenario that offers huge challenges to both retailers and brands. To understand why, it helps to think of multichannel retail as a sector where, often driven by investors anxious to secure market share and drive growth, many companies have been aggressive in their efforts to see off competitors. Think of the histories of Amazon, Asos or Apple. These are, of course, very different companies, yet at different points, each has made plays to be the dominant players in different sectors.
Yet this aggressiveness in itself poses risks. Apple, for example, has sometimes been too reliant on selling specific products at a premium price. Pureplay Asos ran into problems in the wake of the Covid-19 pandemic, when consumers were, it turned out, happy for any opportunity to get out and about.
As for Amazon, it’s not so much that it has made too many strategic errors but that consumers now grumble about it in the same way they might moan about a local council, rail service or power company. Ubiquity does not make a business popular.
Looking at these companies, it’s certainly possible to argue that instead of constantly looking for growth, retailers should perhaps look to consolidate and become the grown-ups in the room. It’s a seductive argument, although there are pitfalls here too.
One reason multichannel retail is so competitive is that digital technologies of their nature lead to market transparency. When the competition is only a click away, retailers cannot afford to be complacent. Whenever a business is not innovating, there is every chance it is falling behind.
All of which brings us to a counter-intuitive observation, based on analysis of different markets over the course of a year. While consolidation is most certainly occurring, especially in more mature multichannel markets, it is those retailers and brands that are looking for an edge, investing and trying out new techniques, that are faring best.
However, there is one risk here we have to mention. Leaders at even the most forward-thinking retailers can, fooling themselves that they are being innovative, fall into introducing measures that are driven by the retailer’s own corporate perception of what’s important. In short, companies can acquire the habit of looking inwards rather than out, of setting up systems and instituting practices that will make life easier for the company, not the customer.
This never works in the longer term. Rather, across the globe, the most successful companies focus on serving customers better and, in so doing, consolidate their market positions while being best positioned to make the most of new opportunities.
Coming soon: The second annual Year in Data report brings together the highlights and key points from all of the RetailX reports published over the past 12 months.
Through 66 pages, we share the data highlights from the more than 40 reports that RetailX produced in 2023.