A blog post by Evan Sheehan, Global Retail, Wholesale and Distribution Sector Leader
Once again a new year in retail is getting off to an uncertain start, with COVID − the omicron variant − continuing to cause disruption within the sector. Even so, I am optimistic, as retail in the past year has not only managed to survive but has thrived during the pandemic.
My view is based on data from our upcoming annual Global Powers of Retailing (GPR) report—Deloitte’s annual analysis of the largest and fastest-growing retailers and retail segments. Despite a year characterized by fits and starts in the economy as the virus ebbed and flowed, retail overall appeared to be on an upward trajectory. Below I share some additional insights emerging from our research.
Digital continues to dominate
On first glance, it seems this year’s data wouldn’t bear out the impact of COVID—as many of the same players assume the top positions as in previous years. But the fact that the retailers with the largest online presence still dominate can be directly linked to consumers’ shifting buying habits in the pandemic. All new entrants to the top 10 have a strong online presence and retailers of all kinds around the world are now grappling with how to invest and build their own digital presence.
The top entries clearly were able to take advantage of their own internal supply chains to fulfill the needs of those customers who didn’t want to leave the house, quickly pivoting from instore to online purchasing. Furthermore, this is a pandemic trend that is likely here to stay. Even as some instore shopping snapped back once vaccines emerged, it seems that many who came to online shopping for safety, are now staying for convenience.
The pandemic continues to buoy the food segment, with a majority of top entrants grocers and those who offer CPG items. These retailers benefited—and continue to benefit— from stores remaining open throughout the pandemic, so much so that grocery workers are now a new category of front-line worker. And it’s no coincidence that some of the most successful retailers in the past year were grocers who also had a large digital footprint.
In comparison, fashion and apparel retailers took a real hit this past year. But there are signs of this segment rebounding—especially for those retailers that offer these products in tandem with groceries.
Climate action on the rise
In the past year, more and more retailers are making public statements around how they are planning to combat climate change. And more and more consumers are taking notice. With over 70% of consumers deeming climate change an emergency, it’s no wonder retailers need to step up climate action commitments. Even more eye-opening should be the fact that 6 in 10 consumers are changing behaviors in response to climate change.i
Discount and DIY deliver
Consumers are price sensitive, with discount retailers comprising a significant amount of the fastest-growing entries. Unemployment surged toward the beginning of the pandemic and the continuing uncertainty has people trying to stretch their money a little further.
That said, retailers that offer home improvement and home furnishings saw major increases this year. Less travel and more time spent at home meant more time spent refreshing personal spaces and environments. This also carried through to hardline products: sales of stationary bikes, bicycles, kayaks—anything that could keep you fit and entertained in and out of doors—surged, with supply often unable to keep up with demand.
Preparing for what’s next
The disruption over this past year is not likely to recede anytime soon. Supply chains aren’t expected to return to normal until late this calendar year or maybe even early next year. The impact of the omicron surge will only be felt a few months from now in supply chains.
Anticipating consumer needs in the face of such churn will be a large part of how successful retailers are going forward. The retailers that adapt quickly to bring the consumer what they want, where they want it, and when they want it will be the ones that continue to win.
i.Deloitte’s Global State of the Consumer Tracker
Be sure to check out this year’s list of the 250 largest global retailers when our full Global Powers of Retailing report launches in February. Learn more about Deloitte’s Retail, Wholesale & Distribution industry group on Deloitte.com.