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Technology as a distinctive feature. Analyzing European experience

According to a McKinsey & Company study, the CEOs of European retailers are concerned about three things:

  • Cost which has once again become the number one criterion for the low-income consumer.

  • The Internet, which has become the main sales channel, while marketplaces are losing visitors.

  • The post-apocalyptic reopening of restaurants that could lead to a decline in retail profitability.

These three trends are countered by:

  • The willingness of high-income consumers to pay more for environmentally conscious products.

  • These consumers' perceptions of preumization in most product categories.

Whether counteracting the polarization of consumer segments will balance retailers' profits, we don't yet know. But we can say for sure that they will have to make a significant effort to maintain their profitability.

In Ukraine, especially in the periphery, we observe the impact of Internet commerce on the activities of food retail to a lesser extent. Although in general the share of online shopping is actively growing. At the same time, savings are noticeable, in particular, on essential products. 60% of Ukrainians save on certain categories of goods. The saving mode started with the first lockdown and is still going on. In addition to lower incomes, the reason for saving is the uncertainty of the future and the prospect of easing or ending the coronary crisis.

That is, the issue of profitability is also being updated for Ukrainian retail, and we in IT have a lot to offer. No wonder McKinsey & Company calls technology a hallmark. The speed of digitalization becomes a point of differentiation for retailers and is confirmed (at least in Europe) by growth of investment in automation (+13%).

Companies should invest in automating back office and supply chain processes, which can be one of the levers to influence profitability. An interesting modern alternative to “heavy” automation solutions is RPA (Robotic Process Automation), which involves the creation of software robots. This is a purposeful approach. Works study current business processes and automate routine operations exactly where the business needs it.

Improved analytics will help you identify new reserves and further optimize profitability (for example, through more personalized offers or optimized prices and promotions). In particular, detailed assortment planning (even local or store-specific assortment) can be a good solution to better reflect the dynamics in a particular store, as consumer polarization is likely to increase even more. McKinsey & Company notes that thanks to this sale will increase by 3-6%.

Extensive data technologies and machine learning (Big Data & Machine Learning), implemented in the recommendation system or in a reasonable search on the site, will help increase the average check. In addition, they help to improve the efficiency of strategic decisions: sales forecasting, supply, demand elasticity calculations. And obtaining additional client data for analysis is the task of implementing an omni-channel strategy. Modern channels should complement each other and create a seamless customer experience that enriches customer analytics. Do not forget about the security and stability of business applications. Solutions for network monitoring and management, load balancing still do not lose their relevance.

Well, the scope of work is outlined! We at Accord Group will be happy to help you grow your income.

You will be interested to know how we helped FOZZY Group to digitize inventory control.

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