Retail Trends Provide Challenges and Opportunities for Optimization

Performance Improvement


August 16, 2016

It’s no secret that consumer shopping habits have shifted drastically over the years as mobile technology and e-commerce have caught on across a range of demographics. Thousands of new competitors have sprung up to meet the ongoing consumer trends toward timeliness, convenience, and customization and many legacy retail companies – particularly the giant chains – are struggling to pivot.

Fortunately, the tools to do so are more precise and powerful than ever before. Retail companies have access to huge amounts of customer data, along with technology like in-store beacons to give them insight into exactly what their customers want. Cloud-based operations and the lightning speed of global connectivity give retail organizations the advantage of agility.

The companies that are quick to react to trends are the ones who will be best positioned to keep up with their customers’ needs in years to come. To do this, retail organizations need a strategy of continuous improvement and innovation, streamlining themselves in order to pivot as needed.

Here are our top three trends to consider:

  1. Supply chain optimization: Fast fashion retailer, Zara, has taken control of its supply chain in order to react to trends in record times. A look that catches fashionistas’ attentions on the runway can be designed, produced, and shipped in as little as two weeks. The small-batch production has its additional costs, but reaps rewards in Zara’s impressive numbers: 85% of items are sold at full price (compared to the industry average of 60-70%), and less that 10% of stock goes unsold (compared to the industry average of 17-20%).
  1. Capturing changing demographics: Target is a strong example of a company shifting its model along with its changing demographics. Since the recession, the company has been broadening its attention to include urban and Hispanic shoppers, through advertisements and by rethinking their traditional format. The company opened their first 20,000 square foot TargetExpress in Minneapolis in 2014, and followed that success with small-format stores in urban centers throughout the US.
  1. Meeting customer demands for convenience: Target isn’t just relying on location to drive their new strategy. The company has integrated their in-store and online shopping experience to cater to trends with offerings like free shipping, store pickup, and a subscription service for household essentials. Other big retailers like Amazon and Walmart are also taking heed of the popularity of subscription services like Dollar Shave Club, Birchbox, and Stitch Fix. The most recent example of new business models being successful and potentially game-changing is Walmart’s acquisition of

Retail trends are shifting rapidly, and the challenge will be to stay ahead of the curve with each new development. This will require a nimble approach that starts with streamlining performance in order to achieve operational and organizational excellence. There are many tools and new business models available for retail companies to be successful in the omnichannel world – however sifting through the range of options and determining how best to apply them together, while still maintaining the existing business, will be the challenge of putting together the various pieces to the complex puzzle.

For more information on how to optimize your retail organization, download our latest white paper here.

Drew Aron_Headshot This blog was co-authored by Drew Aron, a principal at North Highland.  Drew has extensive experience leading the development of consumer brands and brand messaging, driving the launch of consumer product lines, creating customer loyalty programs, and driving strategic roadmap development for  consumer product companies.

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