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| Our best ideas, quick and curated | July 1, 2022 | | This week, retailers feel the big (price) squeeze. Plus, what’s putting the sizzle in semiconductors, who’s leading the transformation at Wipro, and how tech is transforming higher education. | | | | | Roiling retail. What haven’t retailers been through since 2020? A dramatic consumer retrenchment in the early phases of the pandemic, a fierce shift to online sales, a return to omnichannel, followed by in-store shoppers again—thankfully—and now rising inflation in many markets. | | The price isn’t right. Retailers must contend not just with the rising cost of merchandise but also with cost increases on everything from manufacturing inputs and freight to fuel and wages. Consumer sentiment is darkening, and spending has eased in some categories that were previously growing, causing them to flatline or even drop. For instance, US consumers are paying more for but consuming less in restaurants, travel, and gasoline. Wall Street is also showing concern about retailers’ prospects. | | There’s no magic cure, but there is hope. Retailers that take a comprehensive approach can develop solutions that sustain their businesses, retain customers, and ensure long-term growth. Taking several actions now, including revisiting their category strategies to reflect shifts in consumer purchase behavior and margin profiles, rethinking operations to optimize productivity, and enhancing supply chain visibility and diversification, can help. | | An inflation ‘win room.’ Managing the implications of inflation across a broad operational landscape calls for an agile response. A flexible, cross-functional structure can set clear goals for the organization, increase the speed of decision making, and apply lessons learned. Retailers can turn these challenges into opportunities—if they make bold, deliberate decisions. | | The longer view. Companies that achieve breakthrough performances during economic downturns tend to outperform their peers over the decade that follows. The world saw this following the Great Recession of 2007–09; the most resilient retailers were able to drive 11 percent annual growth in TSR—more than five times higher than their peers—through 2018. The retail environment is likely to remain challenging for some time. Recognizing that inflation is likely to persist can give companies a solid incentive to act holistically across the organization and value chain. | | |  | | | | INTERVIEW | | Long history, strong culture, big transformation | | The software giant Wipro has more than 220,000 employees across six continents and is now India’s third-largest IT services provider by market cap. Rishad Premji, who became its executive chairman in 2019, felt that the company’s performance didn’t reflect its true potential. In an interview with McKinsey, he talked about his determination to make Wipro “a high-performing organization that still has a soul—that is empathetic, vulnerable, collaborative, and decent.” | | | | | | MORE ON MCKINSEY.COM | | How technology is shaping learning in higher education | Students and faculty are eager to continue using new classroom learning technologies adopted during the pandemic, McKinsey research shows, but institutions could do more to support the shift. | | Reskilling older workers for new careers in tech | We debunk the misperceptions hiring managers have about job candidates who are between 45 and 60 years old—that they won’t catch on to technology, will have a hard time developing new skills, and won’t relate to younger teammates. | | Mastering the dual mission: Carbon and cost savings | OEMs will need to move quickly to achieve their “dual saving” ambition of reducing both total product emissions and costs. A limited supply of low-carbon materials adds pressure to act now. | | | | | | | — Edited by Barbara Tierney | | | | | BACKTALK | | Have feedback or other ideas? We’d love to hear from you. | | | | | Did you enjoy this newsletter? Forward it to colleagues and friends so they can subscribe too.
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