During times of economic uncertainty, consumers gravitate towards retailers that offer the lowest prices. With global GDP growth slowing and inflation remaining stubbornly high, this consumer preference is helping boost sales for discount retail formats. Price alone does not determine value, however. Consumers also consider quality, shopping experience, and their personal values when making a purchase. As a result, retailers today are finding success by adopting a more holistic vision of value.
This report comes in PPT.
Amidst the ongoing cost-of-living crisis, the allure of low prices is strong in today's retail sector. Despite this, consumers are taking a more holistic approach to how they define “value”, gravitating towards retailers that strike a balance between offering competitive prices, providing quality, creating enjoyable shopping experiences and appealing to their personal values.
Concerned about the economic outlook, consumers today are searching for ways to stretch their spending further. Discount retail formats have been some of the biggest beneficiaries of this trend. In store-based retail, this means that channels such as discounters, warehouse clubs and variety stores - all of which can credibly offer low prices - are outperforming the rest of the market.
A new wave of online marketplaces offering rock-bottom prices has burst upon the scene, grabbing e-commerce market share as cost-conscious consumers on the hunt for bargains turn to them in droves. Due to the success of these players, more established online retailers are being forced to develop new strategies to stave off the competitive threat posed by the upstarts.
Outside of the discount space, today’s retailers are finding success by upgrading their loyalty programmes. Effective loyalty programmes tend to be ones that prioritise personalised, convenient rewards and emotional connections. By blending technology, community building and gamified engagement, these programmes help foster trust and build long-term consumer relationships.
Savvy retailers are utilising novel technologies such as Generative AI to transform the customer journey, providing enhanced value to consumers by blending personalisation with data-driven insights. These advancing technologies are helping retailers increase engagement, loyalty and efficiency, but they also pose a challenge in terms of balancing investment and profitability.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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