Retail technology experts predict what might be ahead for the year.
Retailers will have to be agile by adjusting pricing and promotions to match changing consumer behavior.
Experts from several retail technology companies gazed into their crystal balls to provide a view of what the industry will experience in 2023 and beyond.
Navjit Bhasin, founder and CEO of Newmine:
• Consumer value matters — Consumers will spend, albeit more cautiously, next year. While inflation may subdue over time, that will only occur with more rate increases from central banks, forcing customers to hold off on larger purchases and shop more for value.
• Bottom line focus— Having navigated the pandemic, inflation, the war in Ukraine, labor shortages and inventory excess, retailers will now focus on their processes to drive greater efficiency and shore up their bottom line. This will take the form of new technology deployment as well as a re-examination of resource allocation.
• Product returns gain center stage — Retailers will address their return problem more comprehensively. While some will add return fees, shoppers expect a certain level of service and will abandon retailers that charge for returns rather than risk paying for them.
Other retailers will take steps to identify and correct their upstream processes that cause shoppers to return items, thereby lowering the amount of returns and improving the customer experience.
Randy Fields, CEO, Park City Group:
• The death of blockchain — Several large tech companies dove deep into the blockchain pool, viewing it as a panacea to address all cybersecurity issues and more. The recent meltdown in cryptocurrencies, combined with the continued lack of solid business cases for the retail supply chain, mean that other existing technologies and perhaps some new ones will be favored by retailers and brands to ensure their data streams aren’t corrupted.
• The peak of online delivery — E-commerce, especially in grocery, hit all-time highs during the pandemic and have since pulled back. Delivery of digital orders will do the same as shoppers want to get out more and traditional retailers come to understand the negative impact of not have customers in the store. The marketplace services and the capture of the customer relationship is promulgating the trend.
• The slowdown of new product introductions — There was a time retailers wanted 200 varieties of every condiment and many other product types. Those days are gone as supply chain issues, development costs and changing consumer behavior act to limit the assortment to what profitably sells at retail.
Dave Spear and David King, senior industry consultants for the retail, CPG and hospitality industries at Teradata:
• Revenge of the CFO — Unlimited free returns? 15-minute delivery? Metaverse? Expect intense scrutiny from finance on the ROI and NPV of such investments, with a tougher hurdle due to rising interest rates.
Expect “sure” cost reduction proposals to win over “wishful” growth projects as investors crave cashflow and profitability.
• Healthy dose of retail — Health retailing continues to blur the line between traditional healthcare providers and general retailers. We’ll see more small and large acquisitions by companies like Amazon, Walmart, Target, CVS and Walgreens, all trying to deliver new health services at affordable prices.
• QR beyond James Bond — QR-codes make a giant leap forward in retail. These square codes will unlock huge amounts of data for consumers to engage with and fuel new innovation in supply chain analytics.
• Techies more approachable — Silicon Valley layoffs and tougher work policies provide a window for traditionally less sexy retail tech teams to attract strong talent on the rebound.
Prashant Agrawal, founder and CEO of Impact Analytics:
• Pricing will continue to be a challenge — Consumer behavior will be dynamic in 2023 as shoppers adjust to a new higher inflationary environment. Retailers will have to be agile by adjusting pricing and promotions to match changing consumer behavior. It’s no longer possible to make smart and timely pricing decisions with disparate processes and legacy software.
Retailers will need a clear understanding of costs, margins and customer willingness to pay at the granular level of individual items. The ability to quickly test various pricing strategies and visibility across the pricing lifecycle will be key to success.
• Forecasting remains critical, new opportunities to get granular with AI/ML — The last few years saw a sequence of unprecedented events with COVID, a unique recovery period and a rare inflationary environment. This will continue to make forecasting challenging as retailers have to weigh recency and history to make forecasts.
Excel is no longer a viable tool to forecast. Retailers and brands will continue to shift to AI-driven forecasting as it becomes the standard. AI-driven forecasting, with its intelligent models and granular views of key drivers, will be a major accelerator, enabling retailers to react quickly to emerging trends.
• Sustainable assortment will be key, waste reduction will be imperative — Consumers and retailers alike are getting real about sustainability. Retailers are shifting from opportunistic initiatives to making sustainability a core business pillar and harnessing it as a competitive advantage. To get to this core, retailers will move beyond superficial measures by using data and AI to personalize assortments at the consumer-level for each location to minimize waste.
Patrick J. Hughes, CEO of eGrowcery:
• Online product expansion for a healthier bottom line — Retailers will expand their online catalog faster and deeper than ever, building on their baseline of grocery products to offer a wider range of prepared foods, catering, floral, greeting cards and on-demand meals. Those retailers that master this expansion will see a much healthier ecommerce bottom line and an increase of active shoppers.
• Focus on fulfillment efficiency — There has been a flood of e-commerce tools to take orders but only a handful of truly cost-effective solutions that focus on reducing expenses enough to make e-commerce margin positive. The better fulfillment solutions will not only directly reduce labor costs, but will minimize errors, saving retailers from unnecessary write-offs and shopper credits.
• Demand for a "technology agency" vs just "technology” — Retailers will demand much more of their technology partners. No longer will an e-commerce partner be successful by providing just "technology," they will need to turbo-charge their offering to become a "Technology Agency" that delivers consultative strategies on how to expand marketing tactics, retain profitable shoppers and reduce operating costs. 2023 will separate the "haves from the have-nots."