Cost Realignment

Over recent years, different factors have compressed retail and manufacturing margins. There is a growing need for a wide variety of products for many types of consumers, for example gluten-free and vegan food, extended sized clothing, and made to order items. These trends challenge mass market production.
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COVID-19 and the migration to online shopping compressed margins even further. Some retailers are driven to expand to new product categories and services, compensating for low margins by expanding growing topline revenues. Technology supports this move by creating ways to quickly integrate new business models and new product offerings.

EBIT margin (adjusted) - Median value

Retail revenue growth and profitability by primary product sector, FY2019

(Source: Deloitte Global Powers of Retailing, 2021 - Top 250 Global Retailers)

How can retailers create opportunities to improve profitability or grow revenues?

New Business Models

Many brands are going direct to consumer (D2C) to increase margins by cutting out retail middlemen, while others open subscription services that add new revenue lines.

Rental services have existed in apparel and accessories sectors for some time, and recently brand-managed resale is gaining ground. Success so far has varied, but the flexibility to create these new business models and find the right fit is valuable.

Technologies help brands set up the digital tools to connect with customers and establish the infrastructure needed to make these new offerings.

8 out of 10

companies with subscription businesses sustained or grew their subscriber base.

(Source: "The Subscription Economy, gaining the full potential”, Deloitte)

Direct to Consumer (D2C)

Increasing Efficiencies

Businesses often view personalized marking as a way to increase the topline, but today advanced personalization technology is necessary to make sure ad spending is not being wasted on the wrong customers.

With new data regulations, first party data is necessary to make this level of targeting work. To most efficiently use your budget, how do you allocate it to the right people at the right time with the right offerings?

½ of executives plan to use analytics for better decision making in 2021

(Source: Deloitte 2021 Retail Industry Outlook)