Are you already planning your 2023 retail operations strategy? This is how you could future-proof your operations with the help of RFID for retail.
2023 Retail Operations Strategy: How To Improve Your Retail Operations Management Next Year
We’re over mid-way through 2022, and despite optimism regarding recovery from the recent Covid-19 pandemic, this year has had its own unique challenges for retailers. Across Europe, rising inflation has impacted consumer spending, while supply chain issues have also been exacerbated by Russia’s invasion of Ukraine.
As a result, the retail sector is suffering from slow growth in 2022, which experts predict will worsen before it gets better. In the UK, retail is expected to grow by just 1.9% this year, accounting for inflation, compared with 3.9% growth in 2021. Globally, the retail sector will grow at 5%, half the rate of 2021.
With this in mind, many retailers will be looking optimistically to 2023. However, judging by early forecasts, there is still significant uncertainty in the growth rate for retail next year. In fact, according to some projections, the global retail industry growth rate is expected to slow to 4.8%.
These projections are concerning, but there are ways for retailers to capitalise on the meagre levels of growth in 2023, and that’s by putting in place a revitalised retail operations strategy for the new year. However, developing a successful 2023 retail operations strategy will require advanced knowledge of retail trends and flexibility in adapting brand operations.
Three trends are crucial for retailers when considering their future retail operations management: omnichannel retail, in-store technology, and the future of bricks-and-mortar retail stores. Finally, retailers can also look at how RFID for retail can help improve their operations strategy in 2023.
While the retail industry will undoubtedly see further disruption throughout 2022 and into 2023, taking time now to build a successful retail operations strategy can future-proof your operations and help you weather the storm.
What Does the Retail Market Look Like in 2023?
The retail landscape has changed significantly over the past three years. Covid-19 transformed customer behaviour, forcing retailers to adapt their strategies. So, looking to the year ahead, what are the most significant trends that will affect how retailers plan their 2023 retail operations strategy?
One of the biggest trends to have affected retail in the last five years is the growth of omnichannel retailing. We’ve examined this trend in previous articles, but it will become more critical in 2023.
Data already shows that retailers must be considering omnichannel in any retail strategy. Research from Nielsen has revealed that 91% of FMCG dollar sales come from omnichannel shoppers, and furthermore, FMCG consumers who shop both in-store and online represent 86% of all consumers.
The trend is the same in other retail sectors. While 55% of all consumers say they choose not to shop online because they lack control over their purchase, 45% of grocery consumers still prefer to shop both online and in-store.
Brands can no longer plan their strategies solely around investing in their online brand–they must consider both in-store and online experiences, and plan additional fulfilment options for shoppers. This is even more vital as different channels come into play in the future, such as live-streaming shopping and social media shopping channels on apps such as Instagram.
While many retailers have already embraced the possibilities of in-store technology, in 2023, the trend is expected to become more mainstream as consumers’ expectations change. The traditional brick-and-mortar store of the past no longer exists; today, retailers need to provide interactive and entertaining shopping experiences to retain market share in a competitive retail sector.
For starters, consumers are increasingly seeking personalised experiences. 71% of consumers already say that they want brands to offer them personalised experiences, whether this is in-store or online. An even more significant percentage (76%) say they get frustrated when this doesn’t happen. However, in-store shopping is still the dominant retail channel; retailers shouldn’t disregard this when creating their 2023 retail operations strategy.
Technology such as Smart Fitting Rooms, powered by RFID, can satisfy the customer’s need for personalisation and ensure stores make the best use of innovative technology. Smart Fitting Rooms can respond to customers in real-time and display additional information about proposed purchases whilst upselling similar products, all from the fitting room.
However, it’s not all about personalisation. In-store technology could also improve customer experience in other ways, for example, by installing cashier-less checkouts and in-store virtual assistants. This will contribute to a positive shopping experience and keep customers returning.
According to McKinsey, by 2030, technology will affect around one-third of all retail tasks in the UK. Considering how the pandemic has altered consumer behaviour and the shoppers’ expectations, it’s clear that in-store technology will be a crucial driver of brand loyalty and opinion in 2023.
As well as embracing omnichannel shopping and fulfilment options, retailers should also be reconsidering the purpose of their physical stores. We know that consumers now want to be entertained while they shop; shopping has become less of an act or chore and more of an experience. In-store technology can make this possible, but it’s also about reconsidering the possibilities of brick-and-mortar stores in your 2023 retail operations strategy.
For example, many brands now utilise their physical locations not just as shops but as event spaces, too, or solely as community spaces. Vans is a primary example of this: their London and Chicago ‘House of Vans’ locations incorporate an art gallery, skate park, cinema, and live music venue, plus cafes and bars.
On the other end of the spectrum, some retailers are turning their physical locations into ‘dark stores’ or ‘ghost stores’ – advanced distribution centres that offer consumers the chance to pick up their orders from the curbside or dispatch products from closer to home. With consumers increasingly asking for different shipping options (59% of consumers are interested in click and collect shipping options), this should be a vital consideration in any 2023 retail operations strategy.
How Supply Chain is Changing
However, future retail trends won’t just affect the consumer experience. Supply chains have had a difficult couple of years; Covid-19 put significant pressure on retail supply chains, and consequently, they are innovating rapidly.
Supply chain disruption throughout the Covid-19 pandemic was extensive. Over half of supply chain management professionals say they experienced ‘moderate disruption’ during the pandemic. However, despite this, many retailers (62%) still have limited supply chain visibility, while 15% say that their visibility is restricted to production.
Supply chain problems during the Covid-19 pandemic have uncovered a pressing need for greater visibility and control over supply chains to prevent the same disruption from occurring in the future. To future-proof retail operations, supply chain visibility is a crucial element for retailers to consider within their 2023 retail operations strategy.
In addition to visibility, transparency is also vital. Since 2017, the number of online searches for sustainable goods has increased by 71%. Consumers now demand that retailers make sustainability a priority, in their products and the production process.
Not only does this mean switching to environmentally-friendly packaging where possible, but also being transparent about retail supply chains. As we mentioned in our recent article about sustainable fashion, supply chains can significantly impact sustainability: retail brand Patagonia state that 95% of their entire carbon missions come from their supply chain.
As a result, any brand’s 2023 retail operations strategy must consider how to make supply chains more transparent, both as a way to signal to customers that sustainability is a priority, and to identify areas of environmental improvement within the supply chain.
RFID for Retail: How Can it Help Streamline Retail Operations Management?
So, when creating a 2023 retail operations strategy, brands should be aware of how they can submit to consumer trends and changes in supply chain strategy. Thankfully, one solution covers both of these things: RFID for retail.
Firstly, when retailers implement RFID in stores, it can offer retailers up to 99% inventory visibility, compared to an average of around 60%-80% visibility. Inventory visibility is key to omnichannel retailing, as brands need a high-level view of all the stock they have and where it is, whether in a warehouse, distribution centre, or on the shop floor.
Similarly, RFID for retail can help retailers expand personalisation in stores and anticipate the trend towards increased automation and technology in retail. In virtual fitting rooms, for example, RFID technology can help display stock levels of items in stores and online and encourage customers to buy.
We’ve also mentioned how retailers should consider offering consumers additional shipping options like pick-up-from-store or ship-from-store. There’s certainly value in adapting physical locations to become ‘dark stores’, but this is only possible if retailers have in-depth data on their stock. RFID for retail can provide this.
Finally, over the last two years, supply chain disruption has exposed the need for greater visibility in supply chains. Only with up-to-date data can retailers strengthen their supply chains for possible future disruption. RFID technology can offer retailers advanced data about supply chains and inventory, giving senior retail operations management teams knowledge of weak points in supply chains.
Retailers can also harness RFID data to explore the environmental impact of supply chains. Retailers who want to prioritise their sustainability practices can also opt to publish this data, increasing their reputation for sustainable retailing.
Why You Should Invest in RFID for Retail in 2023
We’ve outlined how RIFD for retail can help expand and future-proof your 2023 retail operations strategy, but why is now the right time to implement the technology?
Global RFID adoption has significantly increased in recent years; in North America in 2020, 93% of retail chains were using the technology, up from just 34% in 2014. As a result, the technology is said to have surpassed the ‘tipping point’ where RFID for retail technology is now widespread.
This year alone, major retailers such as Walmart and Nordstrom have announced that they will be incorporating RFID into their future retail strategy, starting at the end of this year. Similarly, next year Michelin will finish incorporating RFID technology onto all of its tyres.
Increased adoption of RFID globally has also significantly impacted the cost of the technology. The average cost of an RFID tag has fallen by 80% in the last 10 years. Similarly, the cost of RFID readers has also dropped by 50%. In that time, the accuracy of RFID technology has doubled, while the number of possible use cases has soared. Now, McKinsey predicts that RFID for retail can unlock 5% top-line growth for retailers.
With retailers increasingly grappling with frequent supply chain disruption and consumers asking for new ways of shopping, there has never been a better time to implement RFID into your 2023 retail operations strategy. This technology will improve your retail operations management and ensure that your future retail strategy maximises profits.
Retail operations RFID management software
Stock accuracy, on-floor availability, and omnichannel applications in stores.
Book a demo with RFID to find out how our cloud-hosted RFID for retail solution could help improve your 2023 retail operations strategy. Our multi-user app can provide intelligent stock takes and a smart in-store replenishment process, and later, you can scale the solution to offer omnichannel services and effectively manage your entire store operations with real-time, item-level inventory visibility and analytics.