Retail executives are displaying a positive outlook for their industry and the enduring presence of brick-and-mortar stores despite an increasingly difficult and multifaceted market landscape, according to a WTW report.
The broking giant conducted a comprehensive survey involving 700 top-level executives across various retail sectors, including food and supermarkets, luxury goods, department stores, health and beauty, electronics, home improvement, and exclusively online businesses. The objective was to gather insights on the industry’s perception of future trends, potential threats, and opportunities.
Based on the findings, a strong belief in the future of physical stores is evident, with 84% of respondents planning to operate a combination of online and physical outlets within the next three to five years. This includes 7% of currently online-only retailers intending to establish a physical presence.
Meanwhile, artificial intelligence (AI) is seen as a transformative force for 48% of the surveyed retailers, who anticipate the technology to revolutionise how retail businesses operate. The opportunity, however, is accompanied by escalating risks, including cyber threats, identified by 43% of the respondents, and the challenges posed by rapid technological advancements, as cited by 45% of those polled.
The survey also highlighted a growing concern over reputation risks, with half of the participants considering it the most significant threat to the retail industry in the coming years, exacerbated by the influence of social media endorsements.
Catering to the evolving demands of consumers, who now expect seamless and personalised shopping experiences, has become more challenging as well. Fifty-two percent (52%) of retailers are prioritizing the enhancement of customer experience as a key strategic goal for the next two years.
Notably, obtaining suitable insurance coverage has become more complicated due to escalating risks, with high deductibles, past loss records, and a lack of sufficient risk/claims data being the primary obstacles for 44%, 36%, and 32% of firms, respectively.
Despite the obstacles, though, there’s a wave of optimism among retailers about their strategic directions, with 58% expecting increased profitability in the next two years.
“It is reassuring to see that the retail Industry is very upbeat about the future and embracing new technology such as AI while maintaining a healthy awareness of the risks that go with this,” WTW direct and facultative head Garret Gaughan said in an emailed release.
“It will be crucial, though, that businesses navigate this new digital world safely. Public confidence and reputation are hard won and swiftly lost, and by embracing tech and the digital landscape, businesses need to be aware they need to protect themselves in new ways.
“However, it is fascinating that despite so much commentary regarding the demise of physical retail, even purely online companies see their future as including some element of physical retail space.”
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