The UK retail sector has had to contend with a bumpy 24 months resulting from disruption of the pandemic, but also from ongoing supply chain challenges and an ever-changing geo-political landscape, making forward planning trickier.
The cost of living crisis is upon us, indicating a move into a period of financial unease and further pressures. Household budgets are being squeezed with rising costs and retailers are concerned what impact this will have for consumer confidence and discretionary spend.
However, it is not all doom and gloom. The retail sector has seen strong demand over the last six months and is weathering the storm. Whilst Retail leaders are urged to prepare for a decline there is also an opportunity to re-focus and increase customer centricity in order to succeed.
Paul Martin, UK Head of Retail for KPMG in the UK and Phil Murden, Partner, Consulting for KPMG in the UK discuss the key implications for retailers and how to tackle the impacts.
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Retailer’s costs are going up, and this pressure is set to continue for some time, the main drivers of the cost increases are: Product, labour, utility, and supply chain. Retailers will need to address up to 50% of their pre-Covid cost-base to stay resilient over the next 12-24 months.
There are many traditional levers that retailers can pull to control their costs including reducing estate and headcount although in this climate that’s rarely enough. We are working with many organisations across their end-to-end value chain, where the focus is not just on the verticals but increasingly on the horizontals, in areas such as:
- Employee Value Proposition
- Process improvement
- Transformation of support functions like Finance, HR and IT
- Robotic Process Automation
The ultimate focus should be on doing less by optimising operations and transforming to embrace this new consumer pattern.
Find out more and talk to our experts:
At the latest KPMG/Ipsos Retail Think Tank meeting, members discussed the implications of rising prices and the cost of living crisis through the lens of the consumer, retailer, suppliers and the ESG agenda, focused on why this is happening, and how to mitigate the impact. To read the full whitepaper report please visit the Retail Think Tank.
We are working with retailers to focus on their cost optimisation and how to tackle these challenges in a tangible way. To discuss this further please contact Paul Martin or Phil Murden.
