Five retail trends that will drive new imperatives for 2022
We identified five key trends that are driving new imperatives based on our conversations with customers, prospects and analysts. Mike Webster, Senior Vice President and General Manager, Oracle Retail, shared his views at Oracle Retail Cross Talk 2022, Dallas.
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1) Consumer spending: Changing shopping behavior and increasing expectations
Global pandemics have forever changed the way consumers shop, and how retailers react to them. Consumers began shopping differently. We saw another shift as economies reopened. Due to the pandemic, innovations emerged. These new service models are here to stay.
The way consumers shop and interact with retailers will change over time. The digitally influenced revenue is growing at a rate of 25% to $8 trillion. In China, for example, 50% of all sales are attributed to digital influence.
This trend is expected to continue. However, we recognize that retailers have difficulties aligning their channels with consistent customer or shopper experience. It is difficult for retailers to enter new service models such as subscriptions and recycling, rental models and direct-to consumer. The customer expects personalization. They expect personalization to meet their needs and preferences. They want to know the origin of products, their source, who made them, how they were delivered and whether or not it was sustainably produced.
2) Supply Chain Management: Disruptions and Constraint-Based Planning
The supply chain was affected by market volatility and an abrupt shift in consumer behaviour. This forced retailers to rethink fulfillment models, streamline their assortment and rethink their supplier networks to meet consumer demand. Variability demands a better forecast, agile supply chain management, and a sharper profitability analysis.
Supply chain disruptions may be a fact of life and will continue for some time. The disruption of supply logistics must be anticipated by retailers. These global disruptions will require a reconfiguration of retail supply chains. Retailers need visibility to meet increasing expectations. This is despite the fact that retailers often lack visibility into their supply chains and are unable to address any issues as quickly as possible.
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A efficient retail supply chains management could lead to several percentage points of profitability. To ensure profitable allocation and replenishment of inventory, demand forecasting, receipt flow, and supply chain execution, align planning decisions with receipt flow. Order fulfillment can be achieved by aligning your planning decisions with order fulfillment and supply chain execution.
3) Economic uncertainty
Inflation is already affecting consumer spending. Inflation is already affecting disposable income. This is causing some retailers to lose sales and revenue. Other retailers are experiencing product switching – people trade down or move to other places. Inflation is affecting retailers’ costs.
Retailers are facing increased retail costs, which means they have to balance the expectations of consumers and their retail business costs. Responding to a question about how rising inflation and prices impact their shopping habits, 46% said they would buy less and 54% would look for discounts and deals. Leading companies use retail inventory management to plan and manage their products for maximum profitability. This is a crucial time in which productivity and profitability are most important.
4)People, productivity and attrition of talent
To meet changing consumer expectations, operating procedures that include labor, forecasting, buying, and merchandising have to be adapted. It has become increasingly difficult to retain and attract the right people. It is crucial to create modern, engaging workplaces that provide the tools, workflows, and data needed to help retailers. A retail company has a unique opportunity to attract the best employees.
The best human resource technology in the industry allows you to hire, onboard, train, and keep employees. The ultimate goal is to make front-line employees loyal brand ambassadors that delight customers and drive long-term loyalty. The operational team should have a modern user experience and sophisticated technology to support their day-to-day operations.
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5) Setting and measuring ESG and sustainability goals
Sustainability doesn’t sit on the sidelines of retail businesses. It is not a third party or governance responsibility. It’s expected that it will be integrated into all business processes that retailers undertake – including how they plan, buy, move and attract customers. This is a great opportunity for retailers to improve their transparency. 79% of consumers believe transparency by retailers about product information and sustainability are important. It’s not just about compliance and reporting. The focus should be on the results for retailers. There are many opportunities to increase margins through sustainability efforts. Some consumers will pay more for ethically and sustainably sourced products. There are also ways to reduce costs while improving sustainability and the environmental aspects of products.
These five key trends are the driving force behind all global retailer engagements.
- Get closer with the customer. Customers should be included in the retailer’s data model to better understand their wants and preferences. Customer data can also be used throughout the process.
- Create a blueprint to foster agility – Change is happening at an ever faster pace. Oracle Retail can help retailers build agility in their operations.
- Create space to innovate Retailers must create innovation in their retail processes and people. However, this requires that they free up resources to drive innovation.
Standardizing processes around proven best practice will enable retailers to quickly respond and equip their employees with the right machine learning tools and AI. This will allow them to provide customers with the best experience possible. Retailers that are able to leverage the power and flexibility of a eCommerce platform will be at the top.