Loss Prevention Research Council Weekly Series Episode 132 - Top 5 Strategies and Top 3 Technologies for 2023
With Dr. Read Hayes, Tony D'Onofrio, and Tom Meehan
The 2023 Top 5 Strategies and Top 3 Retail Technologies for Retail Success
https://www.linkedin.com/pulse/2023-top-5-strategies-3-technologies-retail-success-tony-d-onofrio/
First Happy New Year to everyone and I am looking forward to another great year for the Loss Prevention Research Council.
This week, I want to focus on an article that I published this week. It’s titled “The 2023 Top 5 Strategies and Top 3 Retail Technologies for Retail Success” and it’s the cornerstone of a presentation that I have been updating and delivering around the world for years on the disruptive future of retail.
The five strategies for retail success into 2023 and beyond are:
Harmonized Channels
Is it Omnichannel or harmonized retail sales channels in the future. The best definition that I have seen to date, “omnichannel means being available on all possible channels, while harmonized means syncing the in-store with the digital-driven and the human experience, all in one piece. Remember, you don’t have to be on every channel possible, you have to be where your customers are.”
Stores will continue to play a pivotal role in harmonized retail world.
HubSpot’s latest consumer research data found that Gen Zers (ages 18-24) search most often on social media (71%), followed by YouTube ads (56%), ads on music streaming services (55%), and internet searches (50%). However, 73% of people (and 55% of Gen Zers in particular) say they'd still prefer to purchase a product in-store.
Frictionless Commerce
“From the retailers perspective, considering some simple unit economics of a bricks and mortar format, 30-40% of store labor costs are within the checkout / tills which could be invested in providing better service in store and into the price of products, and if the right products could be available at the right time, this could uplift basket fill by 20% and reduce waste by 0.5%, thus increasing topline revenue while enhancing the
The growth of frictionless stores is expected to CAGR 91% and may reach $400 billion by 2025.
The train to frictionless commerce has left the station and future stores will be more automated. Key to this strategy is effective implementation that does not negatively impact customer service.
Digitally Empowered Associates
The pandemic was not kind to employee staffing at store level with customer facing store-level associate shortages costing retailers $172 billion annually.
“Associates are the bridge between retailers and shoppers and play a pivotal role in ensuring shopper expectations are met. However, retailers are struggling to hire and retain workers in a competitive hiring market. Most associates (78%) and decision makers (84%) believe that technology is an asset in attracting, training and retaining extraordinary workers.”
The arrival of the smartphone in the hands of consumers requires more aggressive focus on this strategy as it is becoming a paramount requirement to the success of retail brands
Enterprise Inventory Visibility
In 2022, the problem on inventory distortion (out-of-stocks plus overstocks) has grown to over $1.9 USD trillion worldwide, an increase of 12.7% since 2020, a year that included panic buying.
The first reason by far why consumers will leave your store is empty shelves. While grocery improved by 24% in the last two years, the IHL Group saw a dramatic increase in empty shelves for clothing in Specialty Soft Goods and Department Stores as retailers tightened inventories.
Harmonized retailing only works effectively when a retailer has very high accurate inventory visibility. Digitally empowered associates can provide instant consumer assistance in getting the product they want to buy that is out-of-stock. With high inventory visibility, products can be sold across the enterprise at a greater profit, even to the last unit.
Real Time Analytics / Engagement
Some important research data on data analytics:
- 73% of business leaders say that delivering a relevant and reliable customer experience is critical to their company’s overall business performance today, and 93% agree that it will be 2 years from now.
- Data-driven organizations are 23 times more likely to acquire customers, six times as likely to retain customers, and 19 times as likely to be profitable as a result.
- The top needs for improving customer experience personalization are more real-time insights (46%), gathering more customer data (40%), and greater analysis of customer data (38%).
Consumers already have real time information available with their smartphone when they enter your store. They can and will increasingly respond real time to unfulfilling shopping journeys with negative consequences to retailers that cannot respond quickly to their preferences.
Based on these strategies, in my view, the 2023 Top 3 Most Important Retail Technologies are:
- Edge computing– “Retailers with Edge Computingalready installed are seeing 7% higher sales growth in 2022 than those who don’t. And the numbers for profits are even stronger with 88.3% higher profit growth when edge computing is already installed. Those with Edge Computing installed, are expecting store sales growth 54.3% higher, desktop ecommerce sales growth 73% higher and mobile ecommerce sales growth 47.5% higher than their competitors in 2023.”
- IoT at Store’s Center– The Internet of Things will continue to dramatically grow in retail, especially at the store core center where all products will carry smart sensors. The increased adoption of RFID in retail is an example of this.
- Computer Vision– In 2021, we crossed 1 billion CCTV camerasbeing installed around the world. Many of those cameras now carry data gathering eyes. Computer vision has already proven that it can reduce employee theft at checkout by addressing major challenges such as sweethearting, where cashiers don’t scan every item or ring them up at lower prices. Many more computer vision applications are coming to a harmonized retail channel near you.
The Smart More Profitable Retail Store of the Future
The smart of the future includes many more sensors generating data mostly at the edge. The data will go through intelligence filters with the primary goal of defining immersive experiences that increase brand loyalty.
At the core of retail was and always will be the consumer. The challenge for retailers today is that consumers because of smartphones are much more educated in shaping their preferred shopping journey.
A truly successful retail model will focus on strategies that create brand ambassadors of both store associates and consumers. Technology in the hands of store associates needs to be elevated to deliver a magical digital commercial conversation with the consumer. The alternative is that a consumer, using that smartphone, can instantly buy from a competitor while still standing in your store.
Harmonized channels, frictionless commerce, digitally empowered associates, enterprise inventory visibility, and real time analytics with engagement are the strategies required for success in 2023 and beyond. A great starting point includes greater exploration of edge computing, the Internet-of-Things including RFID, and computer vision to deliver a smarter more profitable retail store of the future.
Happy New Retail Year 2023 and see many of you at the NRF Big Show in January.
