Currently, the global business environment is undergoing major changes. Firstly, digital technologies take the driver’s seat in guiding the development of almost all economic sectors. New solutions cause disruptions that revolutionize entire industries once and for all. For this reason, the global business environment is as competitive as ever. For big retail corporations, it often means participating in the so-called race to the bottom where they seek to indefinitely reduce operation costs. Retail giants such as Zara and H&M outsource their production to developing countries and choose those with the lowest labor costs to maximize their profits. As a result, they can invest more money into innovating their processes.
One of the aspects of the rise of the digital that is especially relevant for retail is more informed buyers. Any information about the desired product or service is one quick Internet search away, which transforms the first stages of the decision-making process. For retail, it means that now it has to handle the so-called omnichannel environment where customers retrieve information from a variety of media (Wallström et al., 2017). The new approach seeks to provide the customer with a seamless shopping experience, be it in person, from their phone, or a personal computer.
As a counterforce to excessive consumption is conscious shopping and the increased awareness of social ills and environmental threats. As noted by Lehner (2015), customers are paying more attention to the ethical underpinnings of production and sales, and they often base their decision on the social responsibility image of a company. The retail industry has to accept the new game rules and put an emphasis on environmentally friendly practices as well as policies that prioritize social development.
References
Lehner, M. (2015). Translating sustainability: the role of the retail store. International Journal of Retail & Distribution Management, 43(4-5), 386-402.
Wallström, Å., Salehi-Sangari, E., Foster, T., Styvén, M. E., & Strandberg, C. (2017). Managing Retail in an Omnichannel Environment—Consumer Behavior, Trends, and Challenges. In Creating Marketing Magic and Innovative Future Marketing Trends (pp. 243-244). Springer, Cham.