What are the key imperatives for retail leaders in 2023? Find out in this blog…
In a recent Board blog on remembering the fundamentals of retail technology to overcome today’s challenges, the “wow factor” of retail innovation was questioned and explored. Retail technology will have a considerable impact on the sector in the future. However, what often takes center stage in the industry are fun and exciting technologies that overshadow practical solutions to some of retail’s most prevalent issues.
The retail industry faces a callous trading environment with numerous high street casualties. The majority of these organizations did not adapt to changing consumer habits; they failed to spot the changing trends and adjust their business models accordingly. In the wake of the COVID-19 pandemic, where changes came in at an unprecedented speed, the companies lacking the ability to make quick changes fall even further behind.
These retailers are not alone in being slow to adapt. Part of the problem is the lack of a solid foundation on which to base business decisions. Many organizations are still too reliant on outdated systems, siloed data, and masses of spreadsheets for analysis, simulation, and planning within their business. These point solutions are cumbersome, unreliable, and require manual data management; entirely unfit to support a dynamic retail organization effectively. Retailers must get the fundamentals right if they are to succeed.
But what should retailers consider to best prepare themselves for the near future? In a nutshell, an integrated approach to making business decisions; a unified platform for retail decisions. To do this, they need to have three fundamental aspects in place:
It all begins with data, a resource that retailers have in abundance. Sales figures, stock levels, distribution stats, and footfall; the list is endless. A comprehensive all-in-one retail Business Intelligence (BI) tool is required to effectively use it, bringing all data sources together in dashboards and reports for easy analysis no matter how large the dataset. This provides a solid foundation for basing all analyses and removing the risk of erroneous or outdated data presented by spreadsheets.
A retail BI solution must include self-service analytics to empower users to manipulate data to meet their own needs, right down to the lowest level of detail. Identifiable historical results and correlated trends delivered within seconds inform decision-making.
It doesn’t end there. BI tools only go so far in reporting what has already happened. Helpful information but not truly enough to take things forward. The next stage is to utilize the same data to plan for the future. Retailers are more than familiar with merchandise planning, assortment planning, in-season planning, and store allocation & replenishment. However, there is often a disconnect between these processes and historical performance data.
This is where an Integrated Business Planning (IBP) platform comes into its own, enabling the unification of operational and financial information. Bringing together finance and operations teams in a more collaborative approach:
With a clearer view of how a particular product line, marketing campaign, or even timeliness of deliveries impacts the profit margin, retailers can make comprehensive plans to maximize their profits based on their business capabilities. What’s more, having BI embedded with planning in the same solution enables efficient and compelling comparison of simulations and scenarios. Therefore, past activities and future potential can be analyzed quickly, revealing patterns, trends, and opportunities.
The final piece of the puzzle is prediction. To make a truly informed business decision, retailers need access to as much information as possible to ensure the taken course of action is most likely to deliver a favorable outcome. When combined with existing sales and performance data, retail forecasting software identifies correlations and produces a forecast in seconds to cover the coming days, weeks, months, and beyond. In this process, required improvements are identified in time to implement them before it is too late.
In addition, the use of simulation capabilities enables savvy retailers to model different scenarios to ensure they can cope. Think about forecasting the impact of a hot summer on the sales of electrical fans, making it possible to identify whether there is enough stock or production capacity to cope with the rising demand. Alternatively, simulating the effect of a new marketing campaign will highlight the potential impact (whether positive or negative) on the sales of other lines.
There are great possibilities out there that can help retailers thrive in an ever-competitive market, but many are yet to accept the need to change. By not focusing on the fundamentals, firms are at risk of sealing their fate in the retail graveyard. A step change is needed, and only those willing to leap today will reap the benefits.
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