As the situation in the country declines in 2022, retailers will face many challenges.
Empty shelves, rising inflation, changing consumer habits, shoplifting and persistent labor shortages are just some of the problems.
A new report from Deloitte says these myriad factors are setting the stage for a “great retail reset” that will lift the business into a more stable and profitable position.
But this will take some work.
The report describes three pillars of the reboot:
Reimagined Workforce: 83% of the retailers surveyed said their biggest investment would be in hiring and retaining new employees. Deloitte says companies should invest in technology and automation to compete with more tech-savvy industries, while also offering greater job flexibility to attract talent.
The changing supply chain: In light of supply chain backups, businesses are looking for more reliable information and technology updates to develop a more agile system. The report says that automation, transparency and new partnerships will play a major role in this.
Combination of physical and digital: 70% of retailers surveyed said they plan to invest more in digital marketing, with a focus on e-commerce and online shopping, although data security remains an issue.
In terms of staffing, Deloitte says it will be difficult for employers to compete with the flexibility of the gig economy for hourly workers, and the COVID-19 pandemic has exacerbated the problem.
Many employees who have been temporarily or permanently fired due to quarantine due to COVID-19 have reconsidered their opportunities and are not so quick to take on the first job they come across. As a result, employers struggle to fill vacancies.
Nearly half of the 50 senior retail executives surveyed by Deloitte in multiple sub-sectors from October 29 to November 9, 2021, expect a shortage of skilled professionals for IT and analytics positions, key roles needed for the reboot.
Technology and automation
The report recommends that given the workforce issue, retailers should invest more in technology and automation to reduce their reliance on physical labor. More than half of the leaders surveyed believe that unstaffed stores will become commonplace in the next five years.
This trend is already reflected in Amazon’s “Just Walk Out” technology, which is used in some of the company’s grocery stores in Southern California. Amazon Fresh markets are staffed but also offer a digital option that allows shoppers to enter the store, grab what they need, and leave without going through a checkout or self-checkout kiosk.
“The (labor) shortage is exacerbated by the fact that retail competes with virtually every other industry for talent,” Deloitte said. “Retailers need to figure out why they’re more attractive than big tech to in-demand workers.”
Changing consumer behavior
The report also notes that existing supply chain networks are struggling to keep up with how consumers shop.
People have become “self-sellers,” the analysis says, buying from a wide range of retail channels through their social media accounts, reselling second-hand goods through digital platforms, and setting terms for purchases to be delivered to their doorstep.
“Forward-thinking retailers should aim to automate their processes as much as possible and consider making significant investments in automated driving technology and last-mile delivery,” the report says.
Sixty-seven percent of executives surveyed named e-commerce and online shopping platforms as top investments, but only a quarter plan to make major investments in data privacy and security.
This can be a costly mistake.
A 2021 Sophos study found that retail was the hardest hit by ransomware, with 44% of retailers being attacked globally. As retail expands its digital footprint — from cashierless stores to drone delivery — the attack surface is widening.
“Cybercriminals have been quick to take advantage of the opportunities presented by the pandemic, which in the retail sector has been linked primarily to the rapid growth in online shopping,” Sophos said in a report.
Small retailers can’t compete with big players who use their data to maximize supply chain efficiency, Deloitte says, but they can improve their efficiency by sharing data with suppliers who might otherwise not know what products they expect to sell or sell at a discount in the future.
As one Deloitte expert said, “There can be no more secrets. Not sharing information is just bad for everyone.”