Global tech report: Consumer & retail sector insights

As featured on BusinessMirror:  Global tech report: Consumer and retail sector insights

The rise of emerging technologies is changing the way customers want to engage with consumer and retail brands. Shoppers today expect convenience, seamless commerce, personalization and hold brands to high environmental, social and governance (ESG) standards. These expectations may only intensify as more digital native shoppers reach consumption age. At the same time, geopolitical tensions and economic uncertainty are putting the sector under increasing pressure.

Consumer spending in the Philippines is expected to grow positively in 2024, driven by economic recovery, reduced inflationary pressures and a robust labor market. However, there are risks that come with this such as domestic economic fluctuations, among others.

These shifts are forcing consumer and retail companies to adapt their business models so they can work seamlessly in a multi-channel world.

In a highly competitive and dynamic environment it can be tempting to rush into implementing technologies in the hope of securing a competitive edge. But the KPMG Global Tech Report 2023, which is based on a survey of 2,100 executives from 16 countries and nine industries, shows that innovation has to be methodically tied to clear business outcomes and carefully monitored for bottom-line returns. Instead of embracing new technologies simply for the sake of it, organizations should ensure they design their digital transformation plans to produce benefits that are quantifiable and are of value.

Many consumer and retail organizations have managed to create value through technology. Out of the 420 consumer and retail executives that were surveyed, 57 percent, on average, have experienced profitability or performance improvements from digital transformation projects over the past two years across the tech categories measured. For example, 23 percent of consumer and retail companies say that their digital transformation investments have performed significantly above expectations in enhancing customer engagement.

But, of course, not every tech investment has generated returns: consumer and retail is more likely than the cross-sector average to report that their tech transformation investments over the last two years have not boosted their profitability or performance levels. 

When they define value for tech investments, leaders should look beyond traditional business metrics, such as financial performance. For example, value might mean using tech to improve employee wellbeing, meet ESG requirements or mitigate supply chain risks. It could also mean renovating data architectures to support the integration of sophisticated technologies such as predictive analytics. A retail company, for instance, might decide it wants to reduce the disconnects between contact channels to create seamless customer engagement journeys. If it knows it is aiming for this kind of agility for customers, the company can work out which technical and data capabilities it needs to build an omnichannel environment where channels are integrated to deliver more convenience for shoppers.

The good news is that most consumer and retail executives in the KPMG survey (65 percent) are aware of the productivity impact and financial costs of their existing tech debt. But the sector is behind the average across all sectors surveyed (70 percent), so it could benefit from increasing its awareness levels to avoid complacency. Accumulated tech debt can rear its head, in the form of unaddressed security vulnerabilities or functionality errors that cause suboptimal performance, and complicate digital innovation plans. So, alongside their innovation efforts, consumer and retail companies must keep a close eye on managing tech debt to stop it from draining value from digital transformation projects.