Last Year, One-Third of World's Largest Retailers Suffered Declining Sales but Not Profits
Which Way Will Retail Shift in World 3.0?
The economic recession has brought about changes in consumer thinking. Consumers are more cautious, and this has had a direct impact on the sales of major global retail chains. In the previous fiscal year, sales for most retail chains dropped. However, this did not impact profits. Despite a challenging economic climate, retail chains managed to adapt and respond more efficiently, especially with regard to the optimisation of inventories held in stock, and succeeded in retaining their year-on-year profit growth. According to Deloitte's recent Global Powers of Retailing survey, fashion retailers showed a particularly strong performance last year.
Business results in the Czech Republic can be expected to be similar to those reported globally. The sales of retailers will be substantially driven by their effectiveness, including the cost at which they are able to purchase products and goods from their suppliers and the bulk discounts they are able to negotiate with suppliers. Sales and ongoing price level drops are one of the major marketing tools used by retailers to attract customers. We can expect that discounts will not be the only criteria on which customers base their decisions. To customers, the best offers will be the ones "tailored to their needs". As such, higher quality requirements, product innovations and better services can be expected.
How will local retailers prosper in future years, what should they prepare for and what shopping trends can we expect? Will customers' interest in online shopping continue to grow while brick-and-mortar shops slide into the background? The answers to the above questions were presented at the two-day Retail Summit 2011 conference in the Retail & World 3.0 section.
Audit Partner-in-Charge, Deloitte Czech Republic