Chief execs at retail and consumer goods companies are overwhelmingly upbeat about business, though most concede they’re behind the eight ball in digital capabilities, a panel of KPMG principals and media concluded.
The retail roundtable, held yesterday at the New York offices of the audit, tax and advisory firm, followed the recent release of KPMG’s annual U.S. CEO Outlook report, a bellwether of economic growth. According to the study, fully 95 percent of U.S. retail and consumer goods CEOs are optimistic about the prospects for their companies, industries and the global economy over the next three years, and plan to invest heavily in physical and digital infrastructure to help close the gap with pure-plays.
Indeed, two-thirds of the CEOs surveyed expect technological innovation and competition from start-ups to disrupt their sectors, which could erode market share and even eliminate legacy players.
To avoid joining the latter, companies are investing in artificial intelligence, machine learning and the IoT in an effort to better connect with customers and increase their speed to market, the survey showed. Other top priorities include data mining and cyber security.
For merchants however, “The rate of change is so rapid it’s impossible to outpace it,” observed KPMG managing director Mark Belford, compelling some retailers to buy their upstart competitors rather than build new infrastructure.
“M&A [mergers and acquisitions] is being used as the new R&D,” he noted, and the matchups, like Walmart’s $310 million purchase of menswear brand Bonobos, can be marriages made in heaven.
“Start-ups are irrational competitors, but they need the stores, the supply chains and the capital of traditional retailers,” Belford said.
But to KPMG principal Matthew Hamory, retailers still aren’t innovating quickly enough. “What made retailers successful over the last 20 to 30 years — expansion and scaling the supply chain — is no longer working; that formula is over.”
Instead, merchants should be busy leveraging their shopper data and honing their customer relations skills, in order to compete with customer-centric start-ups and even legacy players like independent booksellers — a now-thriving channel that stayed close to the customer.
Nevertheless, “I don’t yet see the structural shifts required to face the new challenges,” Hamory said.
