After a difficult year for the retail sector the big issues in 2017 will be currency, corporate governance, the customer journey and Brexit, predicts accountancy firm RSM.
1 People matter(s)
Without great people you can’t sell products. The challenge in 2017 will come from the impact of higher costs arising from the national living wage and the apprenticeship levy. The winners will be those that don’t lose the trust of their teams by trying to recoup through changes to the employee proposition.
2 Further cost headwinds ahead
The economic climate will see increased pressure on costs and margins as the exchange rates continue to fluctuate. The recent business rates review and impact of upward-only rent reviews will also play a part.
3 Importance of the customer journey
The customer journey will move from being a “nice to do” to a top priority. Retailers must review and improve the entire customer experience and not just the final mile. Company culture is an important factor and will challenge multi-brand retailers where labels do not control the customer proposition.
4 Crisis management
From warehousing issues to corporate governance failures, during 2016 several high-profile retailers spent a lot of time in the press for the wrong reasons. Next year they must rethink their approach. Decisions will need to be more scientific and data-based but with higher quality oversight. Embedding good governance will move from being aspirational to a necessary requirement for both decision-making and transparency.
5 Growth through digital content
Customers need to be invited in and the critical role of digital content will become more acute for all retailers. How and what do customers need to know to allow them to build a relationship with retailers?
6 Data-driven decisions
Great customer data will drive decisions about what to sell, where to sell it and how to price it. This will require investment in technology and more importantly will change how the business operates.
7 Post-Brexit landscape
It is too early to predict with any certainty what the impact of Brexit but there are three areas which leaving the EU may affect in the medium to long term: changes in consumer confidence and behaviour; changes to employment and immigration laws; and changes to input costs. All three should be on the board agenda.