Over the past two years, in this “post-pandemic recovery period,” as analysts call it, retailers and brands have faced numerous ongoing and nagging challenges. Inflation, supply chain disruptions, workforce issues and seismic changes in how and where consumers spend have made it difficult for retailers and brands to deliver top- and bottom-line growth consistently.
And on the heels of the recent lackluster holiday shopping season, where Circana told WWD that shoppers spent 6 percent less across general merchandise categories during the Oct. 1 to Dec. 23 shopping period compared to the same time last year, 2024 isn’t looking any better.
But there are opportunities for success, said Gil Hakami, chief revenue officer at SkyIT Group, provider of the Skypad platform. Hakami said the key is to tap into a vast well of technologies and innovations — many of which were born out of necessity from the pandemic.
“As we move into the new year, retailers and their brand suppliers face a host of existential, operational, social and cultural challenges,” Hakami said. “It has been widely reported that the global pandemic kick-started an acceleration of changes bubbling just beneath the surface of the retail industry. It took a global crisis to unlock many of those innovations just waiting to emerge. It was the best of times for innovators who had been waiting for an entire industry to wake up and move into the future. But the big problem was much of the industry was unprepared. So began an uneasy journey forward with visionaries leading the way for many retailers who were struggling to bridge the digital divide.”
Fast-forward four years, Hakami said, and the industry “is still out of balance and reengineering itself to catch up to the present — including systems, processes and personnel. The challenges are equally tech-based and involve the human factor.”
Regarding growth opportunities in retail, Hakami said companies must balance technologies with the human factor. “Digital transformation requires a holistic approach to the retail business and orchestrating all these threads requires different leadership training,” he said. “At the heart of retail is selling things to people who want them — on a high level, retailers will need to fuse technology with personnel development to optimize technology investments.”
Hakami said understanding how to deploy AI, machine learning and emerging technologies is essential to growth. He said data and analytics with precision capabilities to customize for each customer “will be the differentiator between winners and losers. And having the right automated systems with the right talent to manage integrated systems, with unbiased input and prompts, is key. Choosing advanced streamlined solutions and collaborating with trusted partners is a critical investment to drive growth.”
The store itself must also change. Hakami said stores look like warehouses, and retail is more transactional. There’s virtually no relationship with the customer for most of the retail market. But the customer experience is the most important measure of success, Hakami said. “Which is why investments in experience design, which includes the store interior, tech-based personalization systems, integrated reporting systems, and an engaged workforce are essential growth strategies,” he said.
Then there’s the value of data to consider.
Hakami said at Skypad, the team believes that a data-driven approach to decision-making is the most efficient way to derive speedy insights, data transparency, accuracy and reliability with key actionable analytics. “We have researched and field-tested ways to improve demand forecasting and planning,” he said. “The result is that Skypad has revolutionized retail reporting by creating data transparency between retailers and their wholesale suppliers. This includes inventory management, by reporting what’s available and where at physical locations versus the warehouse. We also report on-order and ATS [available to ship]. Of course, transforming data into intelligence is the unlock to make any data and analytics strategy effective.”
Hakami said this transition requires mindful investments with the right tech stack, “and we believe that retailers should invest in cloud-based, automated reporting tools with instant, self-serve access to sell-through data.” He said all of this investment pays off “with a trusted solution partner to track the customer journey and identify key shopping trends to deliver a competitive advantage. At Skypad, credibility, data security and trust are our North Stars.”
He also said the benefit of cloud-based technology is that there are no limits or restrictions. “Think of it as infinite storage space so that reporting can be accessed from anywhere, at any time,” Hakami said. When asked about the platform’s value proposition, Hakami said the company’s Skypad tech breakthrough “is perfect for companies who have gone remote or hybrid because we can deliver instant business insights. Cloud-based tech also enables agility that improves online and in-store capabilities. To be profitable, all retailers need real-time insights to act swiftly and stay on pace with consumer buying habits and market trends. Skypad makes it possible to access data instantly when it’s collected, facilitating improved and more accurate decisionmaking.”
In addition, the platform operates as a cloud-based reporting platform “with unmatched scalability, cost-efficiency and accessibility.” Hakami said the company’s reporting platform “enhances collaboration and bridges the gap between retailers and their brand suppliers, allowing them to work together seamlessly to understand critical sales and inventory performance insights that help optimize the consumer shopping experience.”
Another point of differentiation of Skypad from others is the automation of key data. “For multibrand department stores or e-commerce retailers, Skypad automates the weekly distribution of sales and inventory performance data, internally to buyers and planners, and externally to brands,” Hakami said. “We’re known for the huge time and resource savings we deliver by allowing internal teams to focus on strategizing key business initiatives, not struggling with daily data and reporting access.”
For brand clients, Hakami said Skypad consolidates all omnichannel sales data into a single reporting platform, “allowing them to quickly identify strategic industry trends and target in-season opportunities while also planning for the future.”
“Our core value proposition is that we serve two customers, retailers and brands, with the intent to deliver a superior and more meaningful experience for consumers — and that’s the ultimate benchmark for success,” he said.
For 2024, Hakami and his team have devised 10 “meta challenges that retailers need to manage to anticipate the future, not catch up to it,” he said. Here is what he shared:
- Disruption is a daily reality. Whether disruption is caused by consumer whims and changing behavior or financial constraints resulting from an asymmetric distribution of wealth, migration patterns, and global population shifts, managing disruption is the new reality. And from a macro perspective, you may not be ready for disruption, but you can be prepared.
- Next gens’ redefinition of work. Gen Zers will soon be the majority of the U.S. workforce and they have a different orientation to work, the skill sets they need, and the tools they will use. They are digital natives and have savvy tech skill sets to offer and expect digital tools that are on the cutting edge to make their work more efficient and competitive. Training is also key to retaining the next generation and having them embedded into the development of these programs will make the training more contextual and relevant. Reverse mentoring is a smart way to bridge digital divides among a multigenerational workforce.
- Supply chain and operational dysfunctions. When systems do not talk to each other, operations are at risk of gross inefficiencies. The reporting process is largely broken with a silo-based approach to sharing information. Without integration, it is impossible to have a systemic view of any business. With the transition to dependence on data and analytics to forecast and manage operations, the challenge is building the right system with the right capabilities. Build? Buy? Partner? And above all, do retailers have the right personnel to manage the tech-based systems?
- Localization. The future of relevant retail is to deliver what customers want exactly when, where they are, and how they want it delivered. For a better customer experience, local retail stores need to reflect the products selected for the localized market, which requires real-time supply chain and logistics management.
- Real estate. By 2030 there could be 1 billion square feet of unused office space. There’s a ripple effect to neighborhood retail that depends on office workers. Add to that there are an estimated 1,150 malls and some projections predict that by 2032, there may be as few as 150 malls still in operation. That’s up to 87 percent of large shopping malls that may close over the next 10 years. What real estate scenario planning are retailers actively pursuing?
- Public leadership. The fractious public discourse has forced retail leaders into the spotlight, weighing in on social and ethical issues. This will not diminish, and the retail industry needs to find a balance between commerce and community.
- Short-term goals versus long-term strategy. Pressure from boards and investors forces retailers to deliver short-term gains at the expense of delivering a meaningful customer experience. This pressure disconnects leaders from their customers in the pursuit of profit. Shoppers of all ages will bail on any brand that does not deliver an exceptional customer experience, even if it is value-based.
- Returns and shrink. Retailers fell into the trap of emulating the Amazon model with free shipping and free returns, impacting the bottom line unanticipatedly. With in-store theft becoming a daily occurrence, the challenge is resisting the temptation to make a retail store look like a locked vault, guarded by armed security and off-putting to customers. The alternative of shopping online becomes irresistible.
- Customer centricity. Since retailers are in the enviable position of sitting on first-party proprietary data about their customers, they can serve them on a first-person, customized basis. Also, the retail sector workforce, from frontline to management, should reflect its particular customer base in terms of inclusion and diversity to make customer-centric decisions and deliver the optimal experience.
- Blurring physical and digital. Legacy retail struggles with mastering the digital marketplace. Digital native, direct-to-consumer brands struggle with upwardly spiraling customer acquisition costs and, therefore, are opening physical stores. The path forward? It’s not omnichannel, but no channel. In other words, a fully integrated operating system that delivers a seamless, frictionless customer experience.
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