Around half of UK retailers must pivot their businesses in order to avoid collapse during the coronavirus pandemic, industry experts said.
UK retailers need to move away from traditional, store-centric models and embrace online shopping, the latest KPMG Ipsos Retail Think Tank (RTT) said.
The coronavirus pandemic has accelerated changes that were already happening in the retail sector, such as the increasing demand for online shopping. The rapid pace of change has seen retailers scramble to adapt.
According Ipsos research, at the end of March 11 per cent of respondents said they were increasing the amount of shopping they were doing online with UK retailers.
By the start of June the percentage had almost trebled to 31 per cent.
KPMG UK head of retail Paul Martin said: “Looking ahead, there are likely to be six types of businesses that will succeed. These types of businesses will span multiple sectors and categories and not all will represent the traditional business model we have become accustomed to over recent years.”
The “winning models” of the future will be international platform ecosystems, multinational retailers evolving into platform businesses, large scale domestic retailers that form partnerships to compete, value-based retailers, brands selling direct to consumer and category specialists, he said.
Martin said: “I believe as many as 50 per cent of today’s retailers do not fit into one of these classifications, and without pivoting into one of these new models, they will find it extremely difficult to survive.”
However the RTT also said the current operational model for home delivery is not economically viable, environmentally friendly or fair in the long term.
“Changes will inevitably come, whether through further supply chain innovation, cost transfer to the consumer or Government legislation, levies or tax changes,” it said.