Findings from a VMware-commissioned retail tech study show shifting consumer preferences and inflationary pressures drive retailers to address today's challenges with new solutions
NEW YORK, NY / ACCESSWIRE / January 16, 2023 / More than two-thirds (68%) of retailers plan to increase retail technology spending in the next several years, with close to 30% planning to increase spending by 10%, according to a new retail technology study conducted by Coresight Research and commissioned by VMware Inc. The study, "Retail Challenges Boost Edge Technology Investment," examines how economic challenges, intense competition and rapidly shifting consumer preferences are driving retailers to increase investments in cloud-based and in-store technology solutions.
"To meet an unprecedented need to provide customers with ecommerce capabilities, at the onset of the pandemic, retailers doubled down on their ecommerce infrastructure," said Deborah Weinswig, CEO and Founder of Coresight Research. "As we move into a new multichannel norm, a combination of diverse challenges from inflation and increased costs, to shortages of skilled labor, are causing retailers to diversify their both online and offline tech investments, to remain profitable."
To understand how retailers plan to address pain points impacting net revenue growth and customer engagement, the study surveyed more than 200 US-based retailers' about current and future technology investments in November 2022. The study found that tech spending is occurring across all major aspects of retailers' business including operational efficiency, associate empowerment, business insights, security and safety, and customer engagement.
Many retailers have begun to deploy or plan to deploy various technologies, from app integrations to buy-online-pick-up-in-store solutions (BOPIS), contactless kiosks, infotainment terminals, augmented/virtual reality, service robots and more. When retailers were asked about plans for close to 20 different technologies, more than 85% reported they are currently deploying or plan to implement at least one in the near term.
Key findings of the "Retail Challenges Driving Edge Technology Investment" deep dive study:
Security and safety emerge as retailers most significant pain point
- According to the survey, US retailers indicated security and safety as the most significant potential pain point impacting net revenue.
- Challenges ranging from retail crime, such as e-commerce returns fraud and shoplifting-driven shrinkage, to cybersecurity breaches threatening retailer supply chains and data clearly remain acute challenges for retailers.
- More than 50% of retailers surveyed currently use RFID/smart tags for tracking, making it the most popular currently deployed technology. Like RFID tags, other top technologies, such as digital video for loss prevention, reveal respondents' current investment in technologies which address safety and security, a top pain point for retailers.
Supply chain woes and inflationary pressures remain revenue-generating obstacles for retailers
- Retailers continue to combat supply chain bottlenecks and high inventory levels due to inflation and global conflict, however, these challenges seem to be gradually easing.
- Overall, in the business insights category, supply chain visibility/management is perceived to have the biggest impact on revenue and was most often ranked in the top spot (tied with price optimization for top spot).
- Price optimization has also emerged as a major challenge affecting retailer revenue, particularly amid inflationary pressures and deal-hungry consumers.
High energy costs drive retailers to rethink energy and inventory management
- 24% of retailers ranked operational efficiency including energy and inventory monitoring/management as top priority.
- The top ranked pain point on average was energy monitoring. As revealed in the business insights results, global supply chains continue to present major challenges to retailers, with high energy costs compounding these problems. Retailers seek to address energy costs not only because they are a financial burden, but also to achieve more long-term sustainability costs as they attempt to find alternative energy sources.
- The second and third ranked pain points, automated inventory monitoring and store manager dashboards, reveal retailers' needs for increased visibility into their online and brick-and-mortar operations, enabling them to cut costs and save time.
"Tech-enabled solutions provide increased transparency, visibility and enhanced security to help retailers operate in more agile and sustainable ways, maintain a competitive advantage and drive sales in challenging and changing environments," said Ed Durbin, senior director of retail industry solutions at VMware. "In this environment, we're seeing retailers rethink solutions and shift investment priorities from next-generation technologies to solutions that focus on data and asset protection, online and in-store customer engagement and long-term sustainability."
In November 2022, Coresight Research surveyed 200 US-based IT decision makers with at least 50 consumer retail locations, who spend at least $100,000 each year on IT solutions. Respondents did not include those in wholesale club, business services/office supplies, or auto parts industries.
About Coresight Research
Coresight Research is a research and advisory firm specializing in retail and technology. Established in 2018 by leading global retail analyst Deborah Weinswig, the firm is headquartered in New York, with offices in London, Lagos, Hong Kong, Shanghai and Mangalore (India). The firm provides data-driven analysis and strategic advisory to clients including retailers, brands, enterprise technology companies, accelerators and more. In addition to being renowned for its breadth and depth of research, Coresight Research is known for its expertise in the China market, helping clients with market entry and cross-border e-commerce strategies. Coresight Research is also known for its Innovator Intelligence platform, consisting of a vast network of technology entrepreneurs that it actively cultivates through events, mentorship, and regularly updated report coverage. For more information, visit www.coresight.com.
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SOURCE: Coresight Research