In an exclusive series of interviews with top-tier executives in the UK retail sector, Predyktable reveals nine pivotal challenges and strategic priorities for 2024. With CEOs, CIOs, and CMOs grappling with a complex array of issues, a central question looms large: how will they remain profitable in the face of these unprecedented challenges?
Price pressures and supply chain strategies
As retailers deal with the rising cost of living, a common theme emerges; cost-cutting without sacrificing sales or customer satisfaction. In response to a staggering 500% increase in freight costs, some retailers have reluctantly upped prices by 10%, while others are exploring hedging strategies to lock in fixed prices for five years, mitigating the impact of market volatility.
To navigate the global challenges, retailers are venturing into new territories, exploring avenues for reducing operational costs, and embracing a more agile and flexible supply chain.
In fact, a staggering 45% of customer care calls revolve around product location, which highlights the urgency of a robust supply chain to enhance customer satisfaction. Optimising demand forecasting has also become a priority, alongside measures to reduce supply chain costs.
Consumer expectations and shifting loyalties
Retailers are not only contending with immediate fiscal challenges but also anticipating long-term impacts on consumer behaviour. Remaining price-sensitive to consumer expectations is also crucial, prompting questions about the quantifiable impact of service quality on price points.
The ever-changing nature of customer loyalty is also a pressing concern, with businesses now engaged in a customer-swapping dynamic rather than fostering new growth.
Online retail, once dominant, faces challenges as environmental concerns rise and costs become less feasible. There is a noticeable trend toward a potential return to brick-and-mortar stores, as retailers recognise the value of delivering a richer, more immersive customer experience.
Strategic investments and technological imperatives
Over the next three years, technology investment emerges as a key priority for retailers. Focused on technologies that promise a return on investment, retailers are seeking solutions to plug leaks in costs and improve customer experiences.
Retailers are enhancing performance marketing strategies, prioritising customer acquisition, and seeking innovative ways to connect with an audience becoming increasingly selective amid rising competition.
Improving staff well-being has also become imperative as the battle to retain talent intensifies.
Evolving customer behaviour and communication strategies
Changing customer behaviour is prompting retailers to reassess communication strategies. Loyalty is no longer a given. Consumers expect a high degree of personalisation, convenience, and interaction with ethical brands. With the hardship consumers are going through, they also want to feel good about their purchases.
For example, Gen Z especially want to understand how retailers give back and what makes brands credible in this context. Customers want a brand that represents themselves. It’s never been so important to build meaningful relationships.
Loyal customers, recognised as brand influencers, are being nurtured through collaborations and partnerships, introducing interactive products and services to boost loyalty.
The traditional purchase funnel has shifted to the top, influenced by online research and social channels. To communicate effectively, retailers are grappling with the challenge of predicting customers’ preferred channels.
With the battleground for customer attention shifting to social interest channels, an evolution is required in performance marketing and channel strategies. Unsurprisingly, there’s a universal desire to reduce, streamline or optimise marketing spend.
The data dilemma and call for predictive intelligence
As retailers grapple with key decisions on spending, labour optimisation, demand forecasting, customer acquisition and retention, a common thread emerges regarding the efficacy of current solutions that support key retail decision-making.
While business intelligence and data analytics offer some insights, retail executives acknowledge a significant gap in translating data into actionable forward strategies that maximise profits. The key success factor is finding more advanced, accessible, data analytics capabilities that remove guesswork bias and uncertainty from future retail decision-making.
Phillip Sewell, Predyktable’s CEO and co-founder said: “For retailers to not only survive but thrive, a fundamental mindset shift is required. A unanimous call for more predictive intelligence-driven insights echoes throughout the industry. There’s also a need for actionable, forward recommendations that facilitate more profitable and ethical business-critical decisions.”
Sewell, adds: “In a landscape defined by rapid change and unprecedented challenges, the ability to adapt, innovate, and harness the potential of predictive intelligence will be the linchpin for retail leaders striving to navigate the tides of change in 2024.”