Retail Strategies for an Uncertain Future

By Jean Paul Chauvet

Chief Executive Officer, Lightspeed

Jean Paul Chauvet, CEO

Chauvet joined Lightspeed in October 2012 as Chief Revenue Officer and became a board member in September 2013. In April 2016, he was named President and throughout his tenure had been integral to advancing Lightspeed’s mission, including leading many of the Company’s strategic acquisitions, its listings on the Toronto Stock Exchange and New York Stock Exchange, and leading the launch and growth of the Lightspeed Payments platform. Chauvet has also overseen the Company’s robust customer growth worldwide. He was appointed to the role of Chief Executive Officer in February 2022.

With over 17 years of technology leadership experience and a strategic mind to match, JP has been a key element of Lightspeed's continued growth. By developing Lightspeed's go-to-market strategy and taking a more direct approach to engaging independent businesses, he has helped equip over 150,000 retail and hospitality customer locations worldwide with cutting-edge technology. Prior to joining Lightspeed, Mr. Chauvet held various leadership positions at Atex Group across Europe and Asia where his last role was CEO, EMEA. Prior to Joining Atex, Mr. Chauvet was the VP, Sales and Marketing of Nstein Technologies and from 2000 to 2005, he was the VP, Sales and Marketing of IXIASOFT Technologies Inc.

QUOTE: Setting up a brick-and-mortar storefront and an eCommerce site — those are the easy first pieces of the omnichannel experience. More difficult is making those two operations function as a single entity with synchronized inventory.

As we push into 2023, retailers are entering a critical moment in time. The post-pandemic world and the return to physical shopping we experienced over the last 18 months has created more complexity as the worlds of digital and physical commerce have collided. And it is no secret, labor and hiring scarcity continues to present a concerning challenge for many businesses, in combination with elevated inflation, rising interest rates and a potential recession looming. While these are largely uncontrollable factors for business owners, one thing is clear: retailers will be forced to do more with less in the coming year.

So what are the necessary focal points for retail business owners moving forward? How can they best navigate a path to success without sacrificing the best parts of their business? Here are two key strategies for retail merchants to consider in 2023:

Find efficiency through automation

The demands of operating a retail business are continuously increasing, and with the current challenges associated with consistent staffing, more of the operational burden falls on the — often small — management and ownership team. Automating and streamlining as many aspects of the business’ day-to-day functions has become essential.

This is where technology can be the differentiator. Every day, time-consuming tasks like product ordering, manually entering inventory into their POS, inventory counts, staff scheduling, sales reports, and basic accounting pull retailers away from spending time with their customers. Legacy platforms (or even less-sophisticated systems like pen and paper), which are still relied upon by SMBs around the world, hinder the opportunities for success for business owners by limiting their ability to make data-driven decisions. It is important for retailers to leverage the full capabilities of modern retail technologies to help propel their business forward and reduce the burden on their employees.

Optimize inventory for omnichannel selling

Omnichannel selling is no longer a nice-to-have feature — it’s an expectation. Consumers not only want to have an excellent, in-person experience, they also want to be able to shop a store’s full inventory from the comfort of their home and have purchases delivered to their door. The most successful businesses throughout this upcoming period of uncertainty will likely be those that attempt to reach their customers in as many places as possible.

Setting up a brick-and-mortar storefront and an eCommerce site — those are the easy first pieces of the omnichannel experience. More difficult is making those two operations function as a single entity with synchronized inventory. Accurate, real-time tracking of the inventory that moves in and out of a business is essential for merchants, as it allows them to meet customer demand and accurately sell and replenish their stock both online and in-store. This is especially important because inventory is often a significant cost for merchants, but it is also their primary source of revenue. And just like with automating day-to-day tasks, today’s commerce technology can help merchants transition their business into a seamless, omnichannel operation.

It is impossible to accurately predict what the coming year will bring for the retail industry, but with today’s challenges around staffing and consumer sentiment seemingly primed to continue, retailers should focus on what they can control by implementing strategies that will increase their chances of success now and into the future. By leveraging technology to increase automation and drive omnichannel selling, merchants will streamline their operations, ultimately providing a better, more-consistent experience for their customers while giving them the best chance of successfully navigating the changing retail landscape in the coming year.

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33

In a Digital, Omnichannel World, Inventory Remains King

By Ann Ruckstuhl, SVP & Chief Marketing Officer, Manhattan Associates

Ann Sung Ruckstuhl is Senior Vice President and Chief Marketing Officer of Manhattan Associates. In this role, she is responsible for generating awareness and demand for Manhattan’s supply chain and omnichannel commerce solutions. With over two decades of high-tech marketing and product management leadership, Ruckstuhl is an established Silicon Valley executive who has built successful start-ups and transformed Fortune 500 companies.

As consumers, we all love a good bargain. That’s why Black Friday and, more recently, Cyber Monday have become such huge shopping events during the holiday season. It’s all about the discounts. Or is it?

After all, does the size of the savings really matter if you can’t get your hand on the product? Are customers who brave the crowds or spend their time clicking through an online purchase ok with a “rain check” or the digital equivalent of one – a later delivery date? The simple answer is no.

Consumers today have far more power than they did a generation ago when shoppers would go to a store and roll the dice as to whether the product would be on the shelf or out-of-stock. Today’s consumers expect more – more insight into the availability of a product, more options when it comes to buying that product and more flexibility about how and when they take possession of the product.

For retailers, this has become the new normal – they need to unify commerce across channels— be it inventory, customer history, or delivery options. Today’s consumers expect retailers to merge physical and digital shopping experiences and the key to keeping them happy keeps coming back to inventory.

Real-time Inventory Tracking

According to a survey of retailers conducted by Manhattan Associates, only three percent of U.S. retailers say that have an accurate view of the inventory across their entire business – that’s in-store and online – 100 percent of the time. Compare that to the 26 percent of consumers who expect retailers to be able to check availability elsewhere, including online, or the 15 percent who expect the retailer to fulfill the order for home delivery when it’s not available in the store.

Those numbers will only continue to grow among consumers. But with such a small percentage of retailers able to provide that level of insight, the disconnect between the type of information consumers want and what the retailer can realistically offer will only continue to widen.

In addition, 80 percent of U.S. consumers have done some sort of homework online about a product before going into the store to make a purchase and they don’t want to waste their time traveling to a store only to find an empty shelf.

Disconnect between the type of information consumers want and what the retailer can realistically offer will only continue to widen. Retailers don’t have real-time insight into the network-wide inventory at any given moment.

Consumer Demands Keep Growing

Prioritizing Retail Investments

Consumers want control – hence the long-standing customer-is-always-right mentality – but the amount of control they want has increased. Today, they don’t just want visibility of the in-store stock but also over last-mile delivery – that is, when the product will be delivered, how much that delivery will cost, and which carrier will deliver it.

It's only a matter of time before consumers start measuring delivery time satisfaction by the hours, rather than the days.

And that brings us back to our original premise that consumers love a good bargain.

If there is no sense of urgency and the customer is motivated by pricing rather than timing, then retailers can have some flexibility in how they manage their inventory. For the right price, consumers might be willing to wait for the product, which then can be shipped directly from a distribution warehouse or even a physical store in a different part of the country that has an abundance of that product.

Sounds easy, right? But if retailers don’t have real-time insight into the inventory at any given moment, can they really deliver on the promise to give consumers what they want, when they want and at a price point that will recognize the urgency or delay?

As per the survey, nearly a quarter (22 percent) of U.S. retailers agreed that enabling a single view of network-wide inventory in real-time was a top priority. Meanwhile, nearly the same share are prioritizing customer service solutions (25 percent), creating more sustainable and environmentally-aware supply chains (27 percent) and enhancing shop fulfillment capabilities (22 percent).

The challenge, of course, is that none of these priorities work in a silo. Retailers are juggling myriad priorities – worthwhile, valiant ones – all at once. These take time, investment and they must work together so that the underlying technology is robust enough to handle the changing demands of the consumer of the future.

That doesn’t mean retailers need to anticipate every changing consumer demand. Instead, it means that they need the technology that will enable them to pivot quickly to meet those changing demands, to help keep them competitive and help them stay in business.

The simple truth is: If they break their promises to their customers, eventually their customers will look elsewhere to get what they need.

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33

The Future of Retail Pricing

By Edris Bemanian, CEO, Engage3

Edris Bemanian is the Chief Executive Officer of Engage3, which helps retailers and brands profitably grow revenue and drive store trips by tracking and optimizing their Price Image.

Edris is a retail marketing expert and a multi-faceted entrepreneurial leader with a passion for start-ups, technology, retail, and consumer marketing.

Edris is a panelist, contributor, and domain expert with Brick Meets Click, an organization dedicated to exploring and understanding how technology impacts consumers and what the implications are for retailers, manufacturers, and service providers. Edris also serves as a Business Mentor at UC Davis and UC Berkeley and as an Advisory Council Member for California State University, Chico.

Prior to Engage3, he led initiatives across companies including Sodexo, Andnowuknow.com, and Mercado Software. He also founded entrepreneurship programs that were incorporated into the UC Davis Graduate School of Management.

Edris is a recipient of Sacramento Business Journal’s 40 Under 40 award. Edris earned dual degrees in Economics and Environmental Policy Analysis and Planning from UC Davis.

Price inflation has been THE hot topic of 2022. About two-thirds of the S&P 500 mentioned inflation in their latest earnings calls. In Retail, pricing is even more of a focus as the average CEO mentioned inflation 19 times. Leading retailers like Kroger, Walmart and Costco referenced inflation more than 30 times.

In 2022 consumers are paying 13.2% more for fast-moving consumer goods. Consumers have had nowhere to hide as promotion frequency and depth of discount have dropped significantly. While inflation is cooling slightly, with prices “only” rising 47 basis points in November, our clients are telling us they are investing in technology and data science to better manage their pricing and promotion strategies in 2023:

Retailers leveraging price and promotions as a strategic differentiator in 2023, will see a 2-3% increase in revenue, 1-2% increase in store traffic and a 5-8% margin expansion.

Leveraging Technology to Increase Competitive Visibility: Retailers are experiencing rapid increases in cost of goods and need to ensure that their prices remain competitive. For years, retailers have leveraged manual data collection and by-hand item linking to track competitors’ prices. With cost increases coming across the entire store, this is simply not scalable to today’s challenges. In 2023, we see retailers doubling down on their investments to leverage real-time competitive data collection and ML techniques to link their items to rest of market and expand competitive visibility.

A near unanimous trend we’re seeing is the evolution of how businesses view their competitive set. Traditional brick & mortar retailers are now monitoring e-commerce competitors and e-commerce businesses are increasingly matching their catalogues to conventional retailers to price more competitively and win market share.
Focusing on Winning with the Items that Matter Most: As consumers’ wallets tighten, they will look at price value as the key driver of store choice. For retailers to increase traffic, they will need to improve shoppers’ price perception of their brand. Over the last 2 decades, retailers have leveraged econometric elasticity models and volume-based key value items to set their prices. These models drive up prices to improve short-term margin but don’t help improve price perception. In 2023, we are predicting that winning retailers will evolve their pricing strategies leveraging behavioral science to identify the items that matter most to their consumers. Winning retailers will selectively invest to reduce prices on the key items that matter most to improving their Price Image.

Our customers are increasingly recognizing that the items that matter most to their customers are not static or universal. Increasingly, retailers recognize and tailor their key item lists to account for localized demand by geography. The more segmented and localized your pricing strategy, the greater the financial return.
Personalizing Customer Prices & Promotions: In 2022, promotion frequency and depth of discount declined significantly. For years, retailers have used promotions to drive traffic and create differentiation. With shrinking budgets, retailers will have to be smarter in how they deploy their promotion funds in 2023. We expect a significant rise in the frequency of personalized prices and promotions. To be clear, when we say personalized, we mean true personalization. True personalization leverages an understanding of each customer's price image drivers to create personalized omnichannel experiences vs. the “segment based” personalization used today.

Our customers are increasingly recognizing the importance of attributing their product data to enable them to better personalize their promotions and messaging based on customers preferences. Which items in your catalogue are likely to resonate with consumers who value health attributes? Which for those who value environmental attributes?

In 2022, retailers faced unprecedented inflation that pressured their pricing and promotion strategies. Retailers that are investing in the right technology will leverage price and promotions as a strategic differentiator in 2023. The stakes are high as getting pricing wrong can be a “life or death” matter for a retailer. But when done right, we expect retailers in 2023 that adopt modern pricing and promotion technology to see a 2-3% increase in revenue, 1-2% increase in store traffic and a 5-8% margin expansion.

The State of the Retail Industry 2023

JAN 2023

07/05/2024 15:52:33