Inflation worries grow among retailers worldwide
Havas Commerce has conducted a survey called “Understanding the changes of retail in a world in crisis” to find out how retailers are coping with the current situation. The study will be presented at Paris Retail Week at Porte de Versailles, Paris, from September 20 to 22. For the study, 285 retailers from 31 different countries have been surveyed. The first thing learned from the results was that Covid-19 is no longer the retailers' biggest concern. Inflation is now the main reason for their worries.
Thus, 93% of the professionals surveyed stated that inflation had an impact on their activity. In response, 89% of them have chosen to increase their prices, whereas 67% have chosen to reduce their margins, 66% reduced their material expenses, 60% decided to limit human resources expenses, and finally 46% have chosen to freeze or reduce their advertising and media investments.
In France, inflation is a concern for three times as many retailers than the Covid-19 pandemic, which remains the number one issue for only 16% of retailers worldwide. In China however it is the opposite, with 75% of local retailers remaining particularly concerned about Covid-19.
70% of retailers believe that the purchasing power of their consumers has declined
Price is a big issue for retailers. "Whereas in 2021, less than one in two retailers thought that their consumers' purchasing power had fallen as a result of the Covid crisis, 70% of them think so today, an increase of 25 points in one year," the survey states.
In order to attract customers, 23% of retailers are considering launching new loyalty programmes, then 17% would combine these with strong discounts. On the other hand, 27% of retailers say that they have started a "discountisation" of their offer. According to 38%, committing to low prices is the most effective way to develop their turnover.
"For retailers, managing logistics and controlling delivery times and options used to be at the heart of their issues. Today, even if these issues are still present, the question of prices, promotions and advantages for customers is coming to the fore," Havas Commerce found.
Web giants such as Amazon, Google, Meta and Alibaba, as well as retail chains with a discount positioning, like Lidl and Walmart, are perceived as threatening competitors to retailers.
The transformation of the retailer's business continues. 54% of them intend to invest more in digital, including e-commerce and social commerce, while more than one in three retailers believe that "going local" is the trend that will redefine the future of their business.
Web3 however does not appeal uniformly across the globe. "On the one hand, 95% of business professionals in China think that metaverse and crypto are structuring subjects for their activity, compared to 50% and 59% respectively in France," the study noted.
Methodology: survey conducted between July 1 and September 10, 2022 among 285 retailers in 31 countries.
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