Taking Stock: How is Retail Developing Throughout 2023?
As the retail industry emerged from the pandemic tunnel last year there was an optimistic outlook across the sector, despite 2022 proving to be another challenging year for retailers.
As the retail industry emerged from the pandemic tunnel last year there was an optimistic outlook across the sector, despite 2022 proving to be another challenging year for retailers. Through this difficult period, digital acceleration persisted and prominent trends came to light like quick commerce, marketplaces, brand greenwashing, social commerce, a rebound in brick & mortar stores, and a rebalancing of e-commerce. Now that we find ourselves at the midway point of 2023, how has the industry evolved from the challenges of the last few years?
In today’s environment, the retail sector is embracing these changing shopping habits as it continues to evolve after the pandemic. Retail executives are set to embrace another shift in the tides this year, as economic headwinds, geopolitical unrest, fast-changing consumers, supply chain disruption, and persisting labor concerns all come into play. While global retail sales growth is expected to climb by 4.8% in 2023, inflation and unemployment rates are also expected to increase gradually throughout the year.
Retailers have learned a lot about the importance of resilience in recent years, as significant changes in demand during the pandemic led retailers to favor more agile, adaptable operations. Retailers were forced to implement health and safety regulations and solidify their omnichannel offerings seemingly overnight. Furthermore, they discovered that rapidly changing consumer demand necessitates more comprehensive data and solutions to preserve customer loyalty and capture sales in a competitive landscape.
Changing Consumer Behavior
The role of retailers in the customer journey has transformed with the pandemic hastening an emerging trend of consumers demanding value in accessible ways. To compete, stores have gone above and beyond, providing exceptional last-mile services such as buy online pick up in-store (BOPIS), and buy online return in-store (BORIS). Accordingly, retailers have also increasingly reached customers wherever they are, from traditional brick-and-mortar locations to metaverse shops and everything in between.
The post-pandemic shake out in retail has seen brick-and-mortar stores shutting down at an alarming rate for those companies that failed to react quickly to capitalize on emerging sales channels. According to the Centre of Retail Research, 17,145 shops in the UK alone closed their doors permanently in 2022, yet physical stores remain critical to omnichannel strategy. Integrating appropriate digital resources to get the fundamental elements right will be crucial from well-stocked shelves and accurate stock data, to BOPIS and BORIS provisions, and ensuring staff are equipped to provide elevated service levels.
The Continued Labor Shortage
The ‘Great Resignation‘ is another crisis that has characterized the post-pandemic era of retailing. Employees have been leaving their jobs at an astonishing rate throughout the last two years, with 46% of employees admitting that they are planning on leaving their current job in 2023. Furthermore, a 2022 study found that 96% of retailers claim they are having difficulty sourcing associates, while 88% report the same issues with recruitment at distribution centers.
Since 2019, there has been a significant drive toward automated processes and self-service retail. Due to the proliferation of self-checkout and more automated operations, a smaller staff contingent is required to handle these transactions, and this is a trend that is seemingly now a permanent feature of the retail landscape.
The labor shortage and its ramifications seem to be a fixed characteristic of the retail sector going forward, yet there are ways in which retailers can adequately prepare for any labor-related challenges. Continuously ensuring that appropriate technology is integrated into operations may help retailers in the absence of labor, particularly those that can make operations more efficient, freeing up limited staff to drive improved customer service in stores to drive sales.
The Evolution of In-Store Shopping
In previous years, it was expected that e-commerce would take over and physical stores would become obsolete. However, the brick-and-mortar store has experienced a renaissance in the past year with many customers wanting not just a streamlined experience, but a personalized one as well. In fact, 2023 retail statistics show 94% of customers are heading back to physical stores, with 73% agreeing on the importance of a personalized shopping experience.
Innovative technology to enhance staff availability for customers, self-checkout, interactive fitting rooms, and access to data for consumers, will ensure a seamless in-store shopping experience that will keep customers returning.
The Role of RFID
One way that retailers can help ensure a seamless omnichannel experience is the introduction of RFID solutions, such as those that consist of a reader, software, and a physical tag that is attached to each product. This type of solution is becoming increasingly relied upon across multiple sectors who are identifying the substantial impact RFID has on inventory accuracy and product tracking, particularly across the retail landscape.
RFID technology enables retailers to trace products across the supply chain, manage inventory levels, and optimize stock replenishment at the item-level, essentially serializing every product. Implementing this technology has the potential to increase inventory accuracy to 93-99%. Inventory accuracy is the foundational element to an effective omnichannel strategy as accurate inventory leads to higher fulfilment rates and increased sales.
RFID can also dramatically reduce the amount of time spent by employees performing labor-intensive operational processes such as conducting stock counts and looking for individual items in stores and disorganized backrooms. RFID-enabled search capabilities enhance both omnichannel and in-store process and allow for quicker fulfilment times for omnichannel and an improved in-store customer experience as employees can more effectively locate products for customers. As a result, retailers empower employees to focus on customer-facing tasks providing an improved experience for employees and customers alike.