Unfortunately, there are still challenges for retailers to overcome in 2022. But an innovative solution like cloud-based inventory software could offer a way to thrive.
Why is Cloud-Based Inventory Software a Must for Retailers?
While the effects of the Covid-19 pandemic may be lessening, retailers still face plenty of challenges in 2022. Supply chains remain volatile as countries around the world experience new waves of Covid-19 infection, and companies are also struggling with worker shortages.
In addition to this, inflation is affecting retail operations. Businesses are seeing price hikes for raw goods and logistics, and this inevitably means that consumers are going to see the cost of products rise in-store and online.
Despite the evident challenges, though, there are still opportunities for retailers to grow this year. In the United States, retail sales are expected to grow by between 6% and 8% in 2022, though there will be a shift towards services rather than material goods. While inflation is driving up living costs, consumers still want to spend their hard-earned money, but there may be fewer spontaneous purchases.
To capitalise on the forecasted growth this year, retailers must be prepared to make changes to their operations and retail strategy. Firstly, businesses need to focus on finding solutions to supply chain pressures, which may require investment in technology such as RFID for retail. Secondly, retailers need to be aware that customer spending may decrease this year, and as such, building customer loyalty is paramount.
The solution to both of these could be cloud-based inventory software. More than just a way to track stock throughout the supply chain, cloud-based inventory management offers a 360-degree view of your operations, helping you pinpoint the areas that need more help going into 2022.
Retail in 2022: The Challenges
It’s tempting for retailers to think that, because the pandemic is having less of an impact on store footfall and spending now, the retail world is back to normal. Sadly, this is not the case. There are still distinct challenges that retailers must tackle in 2022, the first of these being continued supply chain disruption due to the pandemic.
An industry report released in March 2022 found that 57% of retailers said that supply chain disruptions and shortages were the major supply chain challenge for 2022. This is a significant change – for the last nine years of the same survey, hiring and retaining qualified workers came in as the top challenge facing retailers.
While many retailers expected supply chain disruption to have dissipated in 2022, companies are still dealing with fallout from the Covid-19 pandemic. An additional problem is rising shipping costs, which have steadily increased throughout 2021 and remain high at the beginning of 2022. Strikingly, the container freight index, which reflects the cost of shipping goods via a standard shipping liner, reached a high of $10,839 in September 2021. This is ten times higher than just two years before.
As shipping costs and customer demand increase, retailers are struggling to keep up – and it’s also compounding inflation. 30% of companies expect rising transport costs to limit their exports in 2022, while 29% of companies are worried about rising inflation as a result of supply chain disruption.
Another effect of rising inflation is the cost of goods. As inflation hit a 39-year-high in December 2021, businesses were forced to raise prices in order to cope with increased logistics and production costs. Overall, the cost of goods increased by 7%. More specifically, apparel prices leapt by 5.8% while household furnishing costs increased by 7.4%.
Faced with the rising cost of living, consumers are also changing their spending habits. As the price of items rises, consumers are choosing to hold off on purchases or change their buying habits completely. For example, retail sales in the US grew 0.3% in February, below the 0.4% forecasted. The biggest dent was in online shopping, which dipped by 3.7%. All of this means that retailers will have to find new ways to connect with customers and increase brand loyalty despite rising costs.
Finally, the ‘Great Resignation’ is also set to affect retailers in 2022. We covered this in a recent article, but in short, businesses are being forced to adapt operations as workers are leaving their jobs at a record rate. This is particularly noticeable in the retail industry. 720,000 retail workers quit their jobs in August 2021 alone, and 96% of retailers say they are struggling to find store employees.
The Opportunities for Retailers
There are undoubtedly challenges for retailers in 2022. However, there is also opportunity – especially in the digital space. We’ve already mentioned that retail sales are expected to grow between 6% and 8% this year, but online sales growth will be even higher (11% to 13%). Retailers who prioritise digital growth and embrace technology like RFID for retail will find that there is still space to grow even during a challenging year.
There is also opportunity in recent digital trends like NFTs, which we examined in an article last month. There was rapid growth in NFT production in the latter half of 2021, and the market is expected to continue growing throughout this year. Retailers who have already embraced NFTs, like Adidas, have seen strong sales off the back of the technology. Other retailers like BoohooMAN see the technology as a way to cement their brand identity and reputation.
But let’s not forget about physical stores. Innovative technology can also provide a way for retailers to set their brick-and-mortar stores apart in the post-pandemic world, and offer a new opportunity for growth. Experiences like virtual reality, in-store app functionality and personalised fitting rooms can all elevate physical stores and draw in consumers that are looking for a different in-store experience.
48% of consumers say that they choose to shop in-store because they simply enjoy the overall experience of shopping in person. A further 24% say they like to experience products before purchasing. All of this points to in-store experiences being a growth opportunity for retailers in 2022, as long as they embrace the technology needed to implement unique experiences.
Ultimately, technology is the solution to overcoming the challenges in the retail environment in 2022. Businesses are undoubtedly aware of this; 31% of retail leaders say that they expect to implement more in-store technology in 2022. But what kind of technology should this be?
Well, retailers are also clear on that, too. 34% of retail leaders admit that investment in operational technology to automate processes is a priority for them this year. This includes innovations like cloud-based inventory software. But how can this allow businesses to bounce back in 2022?
Overcoming the Challenges with Cloud-Based Inventory Software
Though retailers are evidently aware of how operations technology like cloud-based inventory software could help them in 2022, many still have not invested in it. The current adoption rate of cloud software is 40%, however, this is expected to rise to 86% over the next five years. This is still the highest adoption rate for all retail technologies, including Internet of Things and robotics, yet there are still too few retailers taking advantage of it.
Cloud-based inventory management is hugely important to recover from the Covid-19 pandemic and tackle sustained problems such as supply chain issues. Despite retailers seeing a return to brick-and-mortar stores – they will continue to remain popular among consumers – a successful e-commerce strategy is key to performing in 2022.
All retail categories are predicted to see e-commerce growth in 2022. This is even more pronounced for apparel and accessories, which was the fastest-growing e-commerce category in 2021 (15.4% YoY growth). Elsewhere, auto and parts will also see significant growth in 2022, capitalising on their 30.1% YoY growth in 2021.
However, for retailers to take advantage of e-commerce gains, they must find a solution to the retail challenges that will inevitably persist throughout 2022: supply chain disruption, rising costs, and finding new ways to connect with customers.
Primarily, cloud-based inventory software offers a way for retailers to better understand their supply chains. As such, retailers who take advantage of this software can gain real-time insights into issues with their stock and react accordingly. By utilising cloud-based inventory management tools like RFID for retail, retailers know exactly where stock is at all times and can improve the flow of goods between distribution centres and stores.
Real-time data can also help retailers boost profits, which is more important than ever during a period of rising costs. As well as showing retailers where products are in their journey through the supply chain, cloud-based inventory software can also help prevent out-of-stock notices in stores.
Stockouts are particularly rife at the moment as supply chain issues hamper on-time deliveries. In fact, stockouts were up 250% in October 2021 compared to pre-pandemic levels. This can prove a major loss to retailers, totalling upwards of $1 billion per year. The in-depth forecasting from cloud-based inventory software can tell retailers the products that are selling particularly well and inform retail executives of exactly when new stock should be ordered to prevent losses on the shop floor or online.
Finally, RFID for retail can allow retailers better insights into their own customers, learning about their buying habits and being able to flexibly change their operations to suit trends. Cloud-based inventory software can also help implement personalised experiences in stores, whether that’s alongside an app or in virtual try-on rooms – and we know that customers are searching for new experiences in stores to keep their visits interesting.
Boosting Retail Performance with Cloud-Based Inventory Software
It’s clear that cloud-based inventory software can offer a solution to many of the issues plaguing retailers in 2022. In fact, many retailers are already aware of the benefits of the technology and have actively adopted it in their operations in recent years. Since then, they’ve reported significant benefits to using cloud-based inventory management technology.
47% of retail executives say that cloud adoption has improved their data access and analysis. The second and third most popular benefits are reducing costs and liabilities (42%) and improving efficiency (38%). Just 8% of executives say they have experienced no benefits of cloud adoption.
We know that cloud-based inventory software offers better supply chain visibility than other, outdated modes of inventory management. But instantaneous data can do more than just resolve supply chain issues – it can also help retailers implement omnichannel services like click-and-collect and ship-from-store. With full stock transparency, retailers can streamline all of their services, ensuring that customers can buy products when and how they wish to.
When combined with cloud-based inventory software, RFID for retail can also help transform the brick-and-mortar store, which we examined in a recent article. For example, 31% of customers want store employees to actively assist them with out-of-stocks. With a cloud-based inventory management portal, employees can assist customers on the ground in stores with just an app. They can check when new shipments of products are likely and also guide the customer to similar products in-store, boosting sales potential and leaving customers more satisfied with their store visit.
There is undoubtedly a wide range of benefits to implementing cloud-based inventory software. Whether you’re looking ahead to future prospects like digital stores or increased personalisation or just looking for a way to get ahead of supply chain disruption, this is the right time to invest in cloud-based inventory management.
Cloud-based RFID Inventory Software
Stock accuracy, on-floor availability, and omnichannel applications.
Book a demo with Detego to find out how our RFID cloud-based inventory management solution could help you outperform competitors and adapt to supply chain disruption. 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.