The Race is On: 2023 is a Crucial Year for Retail Modernization
This year, a perfect storm of economic, social and technological headwinds are buffeting the retail industry. Despite analysts’ fears of a 2023 recession, consumers have switched from online to in-store sales in such large numbers, analysts describe the trend as “boomerang” shopping. Even so, researchers are finding that inflation is eating away their purchasing power by a factor of 5 percent. And digital-first shopping experiences, widely adopted during the pandemic, have boosted consumer preferences for digitally enabled, touchless or contact-free purchasing with a variety of fulfillment options. Yet key technology partners, such as SAP’s EEC system, announced their end-of-life deadline for software support. How should retail industry CIOs navigate the path to profitability and brand loyalty when the picture of success means engineering a blend of bricks and clicks?
Consider the data handling needed for brands to seamlessly deliver warehousing, logistics, transportation and product fulfillment across the variety of digital-enabled choices preferred by today’s retail customers. Breaking it down, shoppers want to buy online and return in-store (BORIS), buy online and pick up in-store (BOPIS), or buy online and pick up curbside (BOPUC). And then there’s the option to buy online and ship-to-store (BOSS). Inside, stores are turning to QR codes, kiosks, digital carts and self-service checkout to reduce waiting times and labor costs. Another data-driven trend that requires visibility into a product’s supply chain is that consumers are scrutinizing sustainability metrics and the environmental impact of goods, components and ingredients (ESG) when making purchasing decisions.
Digital Solutions That Retailers Should Prioritize
Retail executives need to modernize their technology landscape without breaking the bank. Partnering with technology providers will remain a key enablement strategy for retail. However, CIOs need to vet potential partners on key criteria to safeguard their brands.
1. Break up siloed data.
Data connectivity and integration across third-party software and disparate business tools has to be a priority. However, the effort to break up siloed data needs to align with in-store dashboards and digital tools to provide the frontline workforce with visibility into inventory, real-time logistics support, and sustainability metrics across the product supply line.
2. Plug into IoT.
Technology partners can enable retailers to identify supply chain bottlenecks and offer data transparency by leveraging Internet of Things (IoT) connectivity and real-time sensors. Ultimately, these tools shorten delivery times, inform engaged customers, and build brand loyalty.
3. Maximize uses of customer data and channels.
While omnichannel digital touchpoints are focused on customer sales and returns, these capabilities also provide retailers with new savings from operational efficiencies and automation, thereby lowering labor costs. Brands can also increase revenues by leveraging digital channels for personalized offers, targeted e-commerce marketing, and using data analytics to forecast purchasing volumes and stock levels.
4. Become agile and resilient with a composable business strategy.
Finally, decision-makers have to recognize that one size does not fit all. Avoid vendor lock-in that reduces a brand’s ability to respond quickly to market changes with new, agile solutions. A better choice is to look for partners versed in the “composable” strategy. This means organizations that can rapidly build and deploy innovative solutions using tested, pre-built software modules and digital components customized for retail needs.
Modernizing retail systems requires time and investment. By focusing on these key objectives, brands can make real the promise of the truly hybrid, bricks-and-clicks enterprise. In this scenario, everyone hits the jackpot: Consumers enjoy in-person shopping for its heightened sense of discovery with a retail workforce that's empowered for responsive, strategic decision making at scale. And retail executives are afforded a connected digital ecosystem that's geared to today’s consumer behavior using solutions that are future-ready for tomorrow’s changes and volatility.
At Mendix, a Siemens business, Erika Arena is the global retail industry lead. Mendix is a low-code application development platform.
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At Mendix, a Siemens business, Erika Arena is the Global Retail Industry Lead. She has over 13 years’ experience in product management and advertising, where she worked hands-on in supply chain technologies with global ecommerce retail brands, as well as with telecommunications, CPG, automotive and entertainment brands.