Retailers are optimizing processes to become more efficient and agile enough to confidently manage through multiple economic scenarios in 2023.
We caught up with Lindsey Peters, Retail Industry Lead for Celonis, to talk about the National Retail Federation conference, which she attended, and about some of the retail trends you need to know.
Here's a look at the takeaways.
Efficiency begets agility. Executives and retailers at the NRF conference were going for an operating model that accounted for many scenarios. Peters said:
"Retailers are going to be thoughtful about the way in which they're doing things, in order to conserve cash. Once consumers start spending again, Retailers are going to be ready to pounce. They will make sure they have the right inventory in the right place and that their technology is set up to enable them to serve their business and customers when and how they need.”
Inventory management is top of mind. Peters said the increase in promotional activity in the fourth quarter is making retailers much more focused on inventory management.
"In the first part of FY23 retailers will be more mindful of how much inventory they are ordering, because they have excess inventory on hand today. I think they're trying to figure out how to balance those levels to get back to normal before some of the supply chain challenges took place.”
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Front-end processes and back-end processes need to be coordinated. Peters said retailers were using stores as a key differentiator for customers and focusing on an end-to-end experience. "As retail expert Steve Dennis said, ‘The customer is your only channel,’ so retailers need to make sure that their customer experience is consistent end-to-end, whether a customer is coming to the store or shopping online," she said.
With more retailers adding additional capabilities such as BOPIS (Buy Online Pickup In Store) or same day delivery there is an increased need to connect supply chain processes with the customer experience, Peters added. That effort was also highlighted in a recent Celonis retail industry session.
Returns are an immediate challenge. Returns are a big issue for retailers and a great example of the need to combine front- and back-office processes, said Peters. She said:
"The volume of returns, especially coming off of a holiday, has been challenging for retailers. People can return to store, they can return through a carrier - there are multiple channels. Returns often need to happen within a certain time frame to ensure the retailer can still sell the goods. Actually, tracking and managing returns is difficult. A lot of companies don't have a great process in place yet to support the volume of returns wreaking havoc downstream business processes."
Retailers appear to be ready for anything and relatively well positioned. "Retailers are bracing for impact. I think they're hoping that (a potential recession) will be less impactful than everyone is saying. A lot of people mentioned inflation. Supply chain and inventory challenges were also top of mind," said Peters. "Retailers are also optimistic because they are better positioned due to all the transformations that occurred during the pandemic. I think they feel like they're ready for whatever comes next."