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NATIONAL REPORT — Seventy percent of retail executives said their organizations have adopted an omnichannel strategy to link the in-store experience with their company's website, mobile app and social media platforms, according to the 2014 Retail Outlook Survey by KPMG LLP.
"Consumer preferences have evolved and the omnichannel approach has become an imperative for organizations to provide their customers with the shopping experiences they demand," said Mark Larson, U.S. and global retail sector leader for KPMG, an audit, tax and advisory firm.
"Organizations that have adapted well to the rise of e-commerce, customer mobility and other technological disruptions of the last decade are showing some early signs of breaking away, while others are still near the starting line," he continued.
According to the survey, 53 percent of execs in the retail sector feel they are ahead of their peers when it comes to omnichannel adoption, with the bulk of increased spending in 2014 being devoted to website enhancements (67 percent), physical/permanent stores (47 percent) and social media platforms (46 percent).
Adopting an omnichannel business strategy is costly, however, as noted by the 53 percent of surveyed retail execs who cited costs and the complexity of technology upgrades as their foremost challenges.
Cybersecurity is also paramount, in light of the 77 percent of executives who said their companies share customers' personal and payment information across their channels to make for a more seamless shopping experience. In light of the large-scale cyber breaches this year at retailers across the country, executives may need to reevaluate what customer information they share across their channels and determine the appropriate level of security necessary to protect that information, KPMG advised.
The survey also found 70 percent of executives identify customer retention as the most significant driver of revenue growth over the next one to three years. To assist in retaining customers and executing an omnichannel strategy, retail execs are evaluating their operational efficiencies and technology investments. Forty-two percent said operational efficiencies and applicable technology updates have consumed and will continue to consume the most time for their senior leadership in 2014.
In addition, 41 percent of those surveyed indicated that losing share to lower-cost competitors is the top threat to their organization's business model. In relation to lower-cost competition, 36 percent said discounting and other sales incentives have had and will continue to have the greatest negative impact on their company's profit margins in 2014.
The KPMG survey was completed in spring 2014 and reflects the viewpoints of 100 U.S. senior executives in the retail industry.