Beyond retail trends and conventional wisdom

Deloitte Retail Volatility Index

Retail volatility is now being driven by fragmentation of market share. Small and mid-level players are collectively stealing share from traditional retailers. The industry is no longer dealing with the consolidation of the big getting bigger, which has driven the industry for the last 100 years. To increase market share, larger companies must adjust their go-to-market strategies, but first they must consider: Is this volatility cyclical? Could it be structural? Is technology to blame for transforming the way we shop? Is it a lack of style innovation?

To help our clients more clearly understand the drivers of our current market dynamics, we used our Retail Volatility Index (RVI) to study these issues more closely.

Our research was based on the following ideas:

• We are in the midst of massive and unprecedented structural changes impacting the retail industry 
• Exponential advances in technology and consumer adoption is causing disruption

In this study, we measured retail volatility by looking at how the distribution of retail market share has changed from 2007 to 2015 for the top 100 retailers in terms of revenue. Understanding market share trends allows us to take a “big picture” view of the retail industry.

Since retail executives are moved by data, not by theory or opinions, our report helps to uncover empirical data to support these ideas. The report also provides insight into how retailers can prepare and respond to the market dynamics of retail trends.

Report highlights include:

• Why we measure retail volatility
• Testing our hypothesis 
• Retail volatility index findings
• Retail spend fragmentation 
• Understanding stock market correlation
• Expectations for the future
• Winning in a highly volatile retail market
• Volatility in different retail sectors
  

Read the latest news about Deloitte's Retail Volatility Index. 

What is the volatility in different sectors?

While assembling this report, we had the opportunity to explore volatility, not only in the retail market overall, but also within a number of key retail sectors. Our goal was to determine how these retail trends play out in different areas of the industry.

Our research tells us that while volatility has impacted—and will likely continue to impact—all sectors, not all sectors have been impacted at the same pace or in the same way.

For example volatility in the clothing, footwear and jewelry sector has been driven by smaller players with a lifestyle-targeted offering, increasing number of retailers presenting offerings on tech platforms, as well as the decline of many traditional apparel namesakes. Though the superstore we all know and love has retained the number one position for the past five years, it has lost market share in three of those years.

Keep in mind that volatility does not mean the end for retail. In fact, a changing marketplace may spell opportunity for retailers who are informed, prepared and—perhaps most important in a fast-changing competitive environment—adaptable.