Retail in crisis? Focus on the future!

  • MU Consumer Call with Carsten Kortum

By Florian Schmitz

On the 5th of December, MU Consumer practice held its last consumer call of 2022. Following up on ongoing discussions on the crisis of the retail industry, Carsten Kortum, Professor at DHBW Heilbronn, brought theory and everyday practice together.

Carsten is a true retail expert, looking back on 18 years of experience in the retail industry and 9 years as a professor. Today, he is responsible for the retail curriculum in the Consumer Goods Retail Programme, where he trains the future management of German retailers. In his academic work, he focuses on non-food trade and advises trading companies on topics along global value chains.

To lay the foundation in the first part of the presentation, Carsten gave theoretical context on how and why retail institutions evolve or decline, based on the Big-Middle-Segment model. The model points out how innovators or low-price retailers migrate towards the Big Middle, the segment with the largest number of potential customers. Retailers that fail to maintain their value proposition will end up in the trouble segment where they either reinvent themselves, stay as margin-less competitors or exit the industry. The reasons why retailers end up in the trouble segment are many. From internal factors such as failing to recognise threats and having to low prices to external factors such as disrupted supply chains, inflation and change in consumer behaviour.

The second part of the presentation focused on ongoing trends and innovative concepts with the power of transforming retail as we know it. Here Carsten introduced three strategies for retailers to stem decline. The first is about utilising omnichannel-based synergies among channels and devices to increase store sales. The second is making stores more attractive and engaging through personalisation, interactivity, and environmental change. And the third and last strategy is about improving productivity by introducing small-size store formats and downsizing existing stores.

Carsten ended the presentation on an optimistic note, sharing good news and stressing the importance of an entrepreneurial spirit to push innovation within the industry. Rather than cost cutting, retailers should focus on benefits for the customers, better services and price optimisation to establish themselves in the big middle. Do not give up in crises, because it is through hard times that you learn and evolve! You can find the PowerPoint presentation from the webinar here.

The next consumer call will be hosted in cooperation with MU sustainability Practice on January 16th, 2023, giving the stage to Alpaslan Deliloglu, who is the CEO & CSO of Ikea Austria. He will be presenting Ikea’s sustainability agenda: “Let’s assemble a better future – IKEA’s action plan for becoming climate positive by 2030.”

On February 6th, 2023, Christian Bauer will speak on: “Making an 80s iconic brand relevant again: The Bonduelle Story”.

The MU Consumer call gives a platform to discuss recent developments, trends, opportunities, and transformation cases within Consumer Goods & Retail. It is an opportunity to broaden the horizon and to connect through the different sub-sectors of our industry on an international level.

If you are interested in the MU Consumer Call and you want to use the opportunity to present your best practice case to a broader international audience please reach out to your trusted MU consultant or directly to Florian Schmitz, Principal Consultant MU Germany.