The Future of Retail in Australia

1. Retail offering revolves around meeting consumer demands

Customers’ ability to compare product quality, price and express their reviews has increased potentially. They demand the exact product they want, how and when they want it. Consumers are concerned on influencing products that provides wellness and healthy lifestyle. Studies have found that 40 percent of shoppers would value more green space. 85 percent of current generation consider environmentally friendly products compared with those aged 65+. By 2030, the present generation will be the workforce and consumer market, retailers need to have sustainability part for their branding and business model. It’s anticipated by 2030, most products will be free of plastic packaging. Brand loyalty and return customers will be key to retailer success.

2. Online retail is more efficient with packaging and delivery

Amazon is creating a streamlined approach using algorithms and machine learning to deliver multiple packages in a single delivery, increasing efficiency and reducing packaging. Online retailers will transform systems to reduce packaging and number of deliveries by 2030. Digital supermarkets will be implementing virtual products that eliminates delivery, stacking and store monitoring requirements. Enables customers with flexibility to shop anytime, anywhere and delivered at time of their choice. For retailers this means less space occupied because loading and storage will not be required, and customers will still be able to have a ‘shopping experience’ and the ability to browse a physical store. UBS estimates global food-delivery sales will grow tenfold by 2030. Grocery delivery will see high growth in online adoption due to convenience, safety and timesaving advantages. Meal kits will be popular, consumers will simply select recipes rather than individual products. As retail goes online, the floor space can be used as a mini-distribution centre to fulfil online orders effectively.

3. Flexible payments accepted anywhere through a single platform

New development of apps that integrates all form of payment methods and act as a single platform for payments. Retailers need to be flexible and secure in accepting all forms of payment mostly single-click or tap will improve the experience for the customers.

4. Manufacturers the new retailers

Advances in technology and supply chains will facilitate manufactures to be retailers eliminating the need for a distributor. This reduces overall costs and benefit for consumers.

5. Sharing economy has transformed retail requirements

A key driver for new industry of rentals of premium furniture where customers rent furniture rather than buying it cheaply. Many products are entirely reusable and it paves way for sharing economy, so customers will not need to buy something to use occasionally.

6. Big data is central to retailer strategies

Data analytics will help in tracking customer behaviour and inventory in real time. Customer data can help in personalising services such as tailored sales, promotions, loyalty programs and rewards

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Is Retail Data an investment opportunity or unavoidable cost?

Data is the New Oil

A critical strategic asset to retailing success in the current era is data. More retail brands have started to rely more on data-driven insights to optimize pricing, streamline their operations and improve their customer experience. Offline data from retail stores has become extremely crucial to tally with the data from online marketplaces. It leads to many cross coordination opportunities and brands and retailers should utilise to their fullest.

Data from online marketplaces gives invaluable insights on what engages consumers; it helps to differentiate consumers with respect to their engagement patterns and will help organisations to realign their customer’s journey and enhance their buying experience.

Smart brands were compelled to adapt to the massive disruption in the supply chain and in the new normal, they have to become digital.

Social media usage has spiked after the pandemic hit, brands and retailers are finding ways to engage thoughtfully with their followers.

However, it ultimately boils down to how we utilize the abundance of data available to us efficiently. When we merge all the data from online, offline and supply chain — there is more data than we can handle. We require an efficient engagement model to integrate, align and process all the collected data.

Retailers become visionary when they are able to recognise the data that they generated is valuable and collaborate within the organisation and with their suppliers to create win-win outcomes for themselves, suppliers and their customers.

It is recommended that the retailer take a long-term view to achieve commercial success.

There are two possible mind-sets required when sharing the data with suppliers.

The right mind-set drives incremental revenue complimented with transparency and the right level of collaboration in order to strategies and execute for mutual commercial success.

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Trends in grocery post COVID Lockdown

Unprecedented disruption due to COVID-19 pandemic has hugely affected Retail and FMCG sectors. Countries went for complete lockdowns with only essential retailers, grocery stores and pharmacies were functional. There is a significant increase of customers shopping online for the first time and retailers embracing eCommerce. In a recent research carried out by IMR/University of Nicosia, 38 percent made online purchases related to products from supermarkets. Grocery retailers have expanded their services to provide pick-up and delivery channels.

Lessons from China [KPMG analysis]

Evidence suggests the impact and nature of a product during the peak of outbreak will determine its future performance. Certain products exhibited higher growth compared to 2019 growth rate. Apart from sanitizer and disinfectants, home cooking and in-home meals products seen increased sales. There are products that significantly experienced drop during the peak and started to recover, these include biscuits and nutritional supplements. Products like skincare, make-up, alcoholic beverages seems to have a decline rate during the peak.

Key areas for effective recovery post lockdown

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The change in FMCG

A seismic shift in global retail is occurring amid profound changes in consumer culture and technology advancement. The race is intense and executing new product innovation is tough.

The ability to meet the growing expectations of consumers is tougher due to

Driving forces of change

Past few years, the Consumer packaged goods (CPG) manufacturers have been struggling in a low-growth marketplace. In the financial year 2018–19, IRI recorded a 2.4 per cent dollar increase in FMCG sales. Without tobacco, the growth subsides to 2 per cent – well below the 3.1 per cent increase across all Australian retail reported by the Australian Bureau of Statistics (ABS) in the same timeframe.

Increased number of technology-enabled touchpoints, rapid adoption of e-commerce, digital payments and delivery to home has reduced the path to purchase from an in-store.

The increase usage of mobile devices for managing all aspects of daily life, the categories once solely available in store are now just a fingertip away. These changes are a driving force of market fragmentation and channel blurring. The battle for Omnichannel buyers is evolving between Amazon’s order and delivery and retail’s order and pickup.

The marketplace dynamics is shifting creating opportunities for more direct contact with consumers. Meanwhile, competition for the consumer’s attention and wallet is rapidly intensifying as the lines blur between discovery, research, shopping and entertainment. For example, YouTube’s ‘Beauty Try-On’ feature allows beauty product trial in real time during video playback with augmented reality.

Staying relevant

The level of Omnichannel experimentation and present pandemic, forced suppliers and retailers to find new ways to stay relevant with their key consumers and shoppers.

For example, Morrisons became the first UK supermarket to offer discounted perishable food past its “best before” date via the “Too Good to Go” app in all of its 494 supermarkets nationwide. This touchpoint connects users (1.8 million in the UK) with unsold food that might been thrown away by European retailers and foodservice operators. Such concepts will play a role supporting industry players in meeting their quotas around waste.

Concern over loyalties

The Gen Z FMCG consumers are less predictable and less loyal (to both brands and stores) than previous generations. Younger consumers are app oriented multichannel shoppers with different preferences in terms of where they shop and what they buy. Whereas ageing populations are redefining the lifestyle norms of older age.

Everywhere there are examples of smaller, disruptive companies winning hearts and minds through fast thinking and innovation. Global FMCG giants were unable to pace-up and missed millions of dollars in sales to small players. This is evident in Australia, where independently owned craft brewers and local craft distilled spirits gaining share in high-performing segments. IRI reports says in 2019, smaller suppliers delivered disproportionately high growth to Australia’s supermarkets.

Emergence of high-performing small and mid-size players and Industry fragmentation has pushed larger players to take up the cards of merging and acquisitions for future growth opportunities. For example, brewing giant Lion acquiring a 50 per cent stake in Victorian-based Four Pillars Gin in 2019.

Consumers are more concerned about generic goods and opts for personalisation. CPG brands must gain better insight but this causes concern over data privacy, security and intrusiveness remaining pervasive. Research by IRI reveals 75 per cent does not like when websites ask for personal information.

Competitive advantage with Data and Tech

In a constantly changing marketplace it does not matters whether the brand is large or small, being agile is the next step for evolution. The rise of big data, artificial intelligence and machine learning helps CPG marketers to effecting understand and serve their customers. In fact, FMCG is one of the industries that could potentially benefit from analytics and AI as an enabler of competitive advantage.

Enabling digital innovations helps companies to identify customers’ needs, create effective process, optimise personalisation and increase response to insights and actions.

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Future of Manufacturing – Smart Factories

The main driver of competition by 2025 will be the smart factories which believed by 86 per cent of manufacturers in United States. 83 percent believe that smart factories will transform the way products are made. [Deloitte analysis]

Leaders have a broad range of choices and opportunities in terms of which technologies to use, and how to deploy them.

How do they start, succeed, and realize the value in these efforts? What lessons can be learned from those who have already done it? In addition, how can leaders translate those lessons into value not just for smart factories but also for their whole organizations?

Learning from the themes of smart factory initiatives [Deloitte Analysis]

The familiar themes – discovering change management themes

The specific themes – integrating Information Technology (IT) and Operations Technology (OT) in the smart factory

Smart factory transformation – turning lessons into outcomes [Deloitte Analysis]

There is no single approach to smart factory deployment; each lesson can lead to a significant value.

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Change in Manufacturing Workforce

According to the Australian Bureau of Statistics, almost 7 per cent of Australia’s employed workforce is from the manufacturing industry in 2019. There is a widening skills gap as the workforce is ageing and the industry struggle to attract young talents.

Automation has reduced the intake for non-skilled positions and the present skilled positions requirements are changing rapidly. Gen Z work force that are entering the job markets are characterised as being technologically advanced, independent and entrepreneurial and they lack excitement towards manufacturing careers.

In fact, LinkedIn’s top 15 emerging jobs for 2020 in Australia, in the fields of robotics, automation, AR, AI and data scientist will play a huge role in the future of manufacturing.


Retain your existing people by retaining them. Create future skills matrix and invest in cross-skilling your workforce in technical domain that will required in the future.

Promote your workforce from within by developing confident leaders by integrating both technical and soft skills to set them apart. We often see soft skills listed as requirements in job descriptions, but, how often are they included in skills matrices and development plans.

Give equal priority to soft skills development along with hard skills. It can create confident leaders who you can promote with confidence.

A fresh Gen Z graduate typically welcomes change and has an entrepreneurial spirit, so create roles that offer job rotations, flexible working and real responsibility from day one. Providing development opportunities in areas such as automation, data analytics will interest them.

In summary, create a plan for the future rather than struggling for workforce. Cross-train to retain existing people, develop soft skills to promote from within and understand your audience to better design and market the positions to attract top talent.

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