COLUMN | December 13, 2022 | 3 min read
By Shuchi Rana, global head of whitespace intelligence, ServiceNow
Editor’s note: This story originally appeared in the Unleashing Digital Value issue of Workflow Quarterly.
To the average customer, the retail industry appears deceptively simple. Walk into a store, try something on, love it, and buy it—or hate it and put it back on the rack. Or go online, find an item that catches your eye, click “Buy Now,” and wait for a package to arrive.
Behind these straightforward experiences lurks a complex web of interconnected processes. The pandemic underscored the need for all parts of the retail value chain to work in harmony, including design, production, procurement, logistics, supply chain, in-store and e-commerce operations, sales, and marketing. Yet these functions are too often siloed, making it hard to predict or prepare for the unknown. COVID-19 only highlighted longstanding inefficiencies that are now visible to all.
E-commerce grew enormously during the pandemic. Consumers spent roughly $870 billion online with U.S. merchants in 2021, up from $762 billion in 2020. Although that pace slowed in the first half of 2022, retailers must still meet consumers where they are. To succeed, they need to know what their key stakeholders—customers and employees—are thinking.
To stand out from fast-moving competitors, retailers need a connected view of the enterprise. It’s no easy feat to optimize operations, minimize costs, maximize efficiencies, predict inventory in real time, meet customer expectations, and keep employees happy—all while maintaining profitability and innovating for the future.
As ServiceNow’s global head of whitespace intelligence, I get to speak to experts from the largest retailers and solutions providers (software, hardware, and services) in the retail industry. From these conversations, three key themes emerged on the state of retail in 2022.
Retailers are in a never-ending race to stay ahead of the competition. They need to deliver integrated, cohesive experiences across all channels. Younger generations, especially Gen Z, feel more comfortable shopping online. To reach them, retailers need to form partnerships and leverage new technologies, including creative ways to engage with consumers in virtual worlds. This will unlock new business opportunities and models for both retail brands and stores.
In May 2021, for example, Gucci opened a two-week-only Gucci Garden experience in the virtual world of Roblox where online shoppers could try on and purchase digital items for their avatars. Gucci reported almost 20 million visits and hundreds of thousands of virtual gear purchases, according to CB Insights’ 2022 12 Tech Trends to Watch Closely report.
This year, Gucci returned to Roblox to build a permanent town and shop. In the post-pandemic world, brands will have to figure out how best to reach consumers and what platforms—virtual or real—match best with their brand strategies.
Good retail employees are hard to find, expensive to hire, and even harder to retain. In recent years, employees have become increasingly picky about where they work. According to mid-2022 research from McKinsey, at least half of retail frontline workers are considering quitting. To keep staff, companies must deliver employee experiences that include job flexibility, wellness programs, and a growth trajectory.
One way to do that is by providing a unified experience across all touch points, including IT, HR, facilities, legal, and training. Retailers must get the employee experience right and make it easy for employees to solve problems on their own. Doing so makes employees happy and translates directly to a better experience for the customer.
To run stores efficiently and support customers and employees effectively, retailers are embracing digital transformation. With that comes a focus on cloud computing, which brings with it heightened concerns about operational expenses, optimization, and ROI.
As cloud-related expenses grow, retailers must figure out how to run cloud operations faster and cheaper, with better governance, security, and control. To do so, companies will need a clear cloud strategy that provides a centralized view into their entire system, including tracking, monitoring, and managing usage, to bring full visibility and transparency to all IT operations. This will be a critical focus for companies as they move beyond the pandemic and into an uncertain macroeconomic phase.
Retailers live in a dog-eat-dog world, where competitors are consistently nipping at their heels and fickle consumers run after the latest trends and fashions. Only the most agile, human-centered organizations will survive.