These are tough times for the Retail and FMCG industry
Retail is at a crossroads. As consumer spending stagnates in food and declines in sectors like apparel and DIY, the industry is grappling with fierce digital competition and shifting market dynamics. Giants like Shein, Temu, and Amazon are reshaping the rules, while legacy banners—Jennyfer, Camaïeu, Casa—fall by the wayside. Against a backdrop of consolidation and cost-cutting, the question arises: how can retail not just survive, but reignite growth in a volume-driven world?
Retail’s New Reality: Stagnant Demand and the Rise of Digital Giants
The consumption is flat (Food) or decreasing (Do It Yourself, Apparel). The competition is fierce – Shein, Temu, Alibaba, Amazon acting as the rising stars from the internet – and some banners must give up and cease their activities (Jennyfer, Camaieu, Casa…). Most of the markets enter a consolidating phase (e.g. Sports), with leading actors accelerating their competitive advantage and followers struggling to remain in the race.
Independent or franchised companies tend to resist better than integrated chains and gain market share, mostly because of the implication of their local managers and of their organizational agility. Centralized banners like Auchan tend to give back more initiative power to each of their stores, to be less rigid, and Carrefour is turning more shops into private-operated ones.
This pause in the topline growth goes together with an accent put on performance plans and reorganization, towards leaner operating structures and increase in synergies. The store chains create joint purchasing units to mutualize their means and weigh more in front of their major suppliers.
FMCG players also face these consumption difficulties and try to diversify their selling channels: export, Food service, Direct to Consumer… Innovation remains a growth engine for most of the product categories.
From Crisis to Comeback: Putting the Customer Back at the Heart of Retail
The root causes of the decline in consumption are well known : weak demography, problems of purchasing power due to inflation, low citizen morale coming from a blurry international context and a pessimistic domestic environment.
So, what should we do to fix the problem ? Of course, savings are mandatory in a market where the profitability is thin – 1.5% of the turnover in the hyper and supermarkets segments, for instance. Pricing has become a big issue, with the balance between competitiveness and preservation of margins.
But the real guiding light should be the stimulation of consumption and the obsession of revenues growth, since we are in a volume driven business. Topline is key and when volumes suffer, the whole system is shaking.
Consumer centricity and customer experience are crucial to deliver the world-class service that is now expected by clients who have the choice between ordering on the web from their sofa or walking or driving to their favorite store.
This means refreshing the assets in store, when the tendency could be to cut down those expenses. Still a welcoming selling surface is a major factor in generating loyalty and repeat business, not mentioning the bad buzz widely spread on social networks following a mediocre shopping experience.
From Strategy to Store Floor: Why Execution and Leadership Matter Most
Omnichannel development can also gain momentum. Ikea is now selling 25% of global sales through the internet, and success stories like La Redoute prove that a consistent on-line policy can harvest some profitable results.
Retail players should not forget the human factor, which is perhaps more important than in some other industries. The impact of poor headquarters or stores recruitment is fatal, especially among the managers or C-Level population.
Performative but toxic leaders should be avoided at all costs, which means that the candidates must present the right hard skills but also the right soft ones, and that we have to make sure of the cultural fit between the company and the candidate.
Wal-Mart, Action, Fnac Darty… those brilliant models show us that failure is not inevitable and that the right strategy, smoothly executed, leads to commercial achievement.
