The Three Reasons Why Leading Retailers are Spending More on Technology in 2023

… and how better store communication can help

January 14, 2023

New research from analyst firm IHL Group shows that winning retailers are making strategic investments in technology in order to bolster their lead against competitors in 2023.

The report, titled Building an Insurmountable Lead – How Technology is Separating Leading Retailers from Competitors, shows the specific solutions that leading retailers are choosing over others.

Despite an uncertain economy, retailers’ investments in IT continue to grow. Between 2020 and 2022, retailers increased their spending on technology 25% (mostly to deal with the explosion of eCommerce). But that investment will only increase in 2023, with an additional 4.3% of spend anticipated.

Why? Well, according to the report, there are three reasons retailers are doubling down on technology spend in 2023: 

  1. Reducing margin loss associated with online transactions for store fulfillment. In the past three years, the availability of store fulfillment services like BOPIS has skyrocketed… and all that growth didn’t exactly happen efficiently.
  2. Reducing the amount of labor required to operate stores. Seems like the same ol’ story year after year: labor is tight. And with ongoing staffing shortages, it’s about to get tighter (if that’s even possible). Retailers need to do more with less. 
  3. Security technologies to reduce impact of theft. According to NRF, retail shrink accounted for $94.5 billion in losses in 2021 alone. With fewer bodies on the floor (see #2, above), retailers are looking to technology to identify and mitigate threats. 

“Going into 2023 those retailers who will win will do so through better execution,” says Greg Buzek, President of IHL Group. “And that involves investments in technology.”

In order to keep pace with the competition, all retailers will need to take a hard look at their technology stack. And the one place they’ll get the most bang for their buck might surprise you: upgrading their store communication.

In fact, investing in a best-in-class store communications and operations platform can give retailers a leading edge in all of these categories: reducing margin loss, optimizing labor, and even mitigating the impact of theft.

Here’s how investing in a better store communication solution can help retailers achieve these same 2023 technology spend goals: 

Better store communication improves the omnichannel experience (and reduces margin loss).

Unless you’ve been living under a rock these past few years, you’re probably aware that brick and mortar stores are now more than just places to shop. Today, retailers use their stores as mini-fulfillment centers for online orders, too.

“Retailers are using their existing assets to build operations that better serve the omnichannel customer,” states McKinsey in a June 2022 report. “Using stores as fulfillment centers allows retailers to ship from locations closer to customers, which in turn drives down delivery times and cost.”

The pandemic-fueled increase in ecommerce demand, coupled with consumers’ shrinking tolerance for long delivery windows, means retailers have been all but forced to convert much of their “over-stored” physical space into mini-DCs. And while the success of programs like Ship-from-Store and BOPIS from a customer perspective can’t be denied (approximately 95 percent of Target’s digital orders today are fulfilled from within its stores), too many retailers are finding that these programs eat into their margins – significantly.

Why? Because turning a store into a fulfillment center isn’t easy. It requires new technology, new equipment, and – perhaps most importantly – new roles for in-store associates. Employees who once were hired for their ability to merchandise a stack of sweaters or greet customers at the door must now be incentivized based on how quickly they can pull and pack online orders. 

One way to guarantee efficient ship-from-store operations is to first (or, perhaps retroactively) make an investment in-store communications. This helps you achieve three things:

Invest in training. 

Store associates need to understand and carry out brand-new procedures to prepare products for shipping. Clear, accessible training modules and micro learnings – delivered via a mobile app – are the best way to drive consistent store team behaviors at scale.

Prioritize implementation communication. 

New inventory management apps can make pulling the right products from the back room (or that pile of go-backs in the fitting room) a snap – if your frontline teams know how to use them. Ensure new fulfillment technology is implemented correctly and used correctly by funneling all launch communications through a dedicated single source of truth – like a store operations platform. These platforms ensure all stakeholders, from frontline associates to HQ leaders, understand exactly what the goals of the project are, and their specific role in making those goals come to life.

Consolidate in-store tools. 

Toggling between an intranet, email, and an LMS – while also grappling with new in-store fulfillment technology – makes everything feel hard. Investing in a proper store enablement platform with an open API and integrations gives your store employees the ability to access the tools they need to do their job, and the communication and training they need to do that job properly.

Better store communication reduces the amount of labor required to operate stores.

Many retail IT leaders are starstruck by the latest technology: Waze-like directions that help associates pick products in-store, and augmented reality apps that show proper merchandising directions in real-time. We don’t blame them, but we also don’t believe driving efficiency in stores has to be so complex.

In fact, simply upgrading your store communications and task management infrastructure can save your store teams dozens of hours a week and hundreds of thousands of dollars of payroll per year.

Average time savings after implementing Zipline

  • Store Managers: 5.6 hours/week 
  • Associates: 1.5 hours/week 
  • Upper Field Managers: 3.1 hours/week 
  • Publishers: 10.6 hours/week 

Source: Zipline Benefits Study conducted between June and October of 2022.

Here’s how it works:

Cutting down the noise saves time.

Even if it’s only Monday, your store managers are likely already drowning in directives from corporate. There’s a lot to get done out in stores – BOPIS orders to fill, POS upgrades to oversee, new hires to train, floor moves to execute, deliveries to unpack. The problem? All those directives arrive in a million different ways:  Some come in emails. Others are delivered with the new displays. Others are on a calendar that rarely gets checked. A few urgent ones always come in via text. 

Constantly switching between different apps, inboxes, newsfeeds, and folders to find that one piece of information you’re looking for? That time adds up. So does time spent running to the back room from the sales floor to pull out the right binder, or log onto a system that only works on the manager’s computer.

Bringing all HQ directives, long-live documents and last-minute communication updates into a single platform eliminates the need for store employees to go hunting and pecking for the information they’re looking for. Serving it up in a mobile-first app means no more trips to the backroom. 

Turns out, a seemingly simple shift to a single source of truth can save a whole lotta payroll.

Help stores help themselves.

Things go wrong in retail stores – a lot. Registers go down, employees call in sick, and deliveries show up late. Unfortunately, the solutions HQ provides aren’t the most effective. (Try sitting on hold with Store Support while you watch a line of customers grow at the register and you’ll quickly catch our drift.)

A store communications solution that supports instant, two-way communication between stores, stores and their field leaders, and stores and HQ can enable real-time best practice sharing. A team on the east coast that’s figured out a system workaround can quickly broadcast their discovery to stores across the country, before teams on the west coast have even opened their doors. 

Another way to drive labor efficiency is by instituting an employee shift swapping policy. Many store communications and operations platforms have built-in functionality that gives frontline retail workers the ability to manage their schedules autonomously, giving up or picking up shifts from co-workers.

If frontline workers are empowered to find replacement coverage themselves, their manager doesn’t need to burn valuable payroll hours re-working schedules and texting for on-call shifts. and can instead allocate those hours towards more important tasks (like making sure that new floorset is set correctly, and or checking that the registers are functioning and full). 

Better store communication reduces the impact of theft (and helps teams feel more prepared).

According to NRF’s 2022 National Retail Security Survey, Retail shrink, when taken as a percentage of total retail sales in 2021, accounted for $94.5 billion in losses last year, up from $90.8 billion in 2020. 

The main culprit is a recent increase in organized retail crime (ORC) – sophisticated rings of criminals who steal retail merchandise on a large scale with the intent to resell. Due to an increase in felony thresholds and the recent growth of third-party online marketplaces, retailers are seeing an increase in overall risk for their companies.

But ORC groups don’t just hurt a retailer’s bottom line. They also pose a real threat to frontline retail workers. “Gangs have been reported to use Mace chemical spray and Taser stun guns, and eight in 10 retailers noted an increase in violence by customers against workers last year,” states the NRF report. It’s no wonder retail IT teams are funneling more dollars towards theft-prevention technologies this year, including RFID, computer vision at point of sale and license plate recognition.

Another technology that can help? A store communications and operations solution. Here’s why:

Ensure theft-preventing technologies are implemented right the first time.

Sending a third-party vendor out to your stores to install cameras at the POS, or license plate recognition at the front of store, is a process usually fraught with scheduling difficulties, miscommunication, and ultimately – error. Maybe shipments are delayed, or hardware arrives and key pieces are missing. After investing millions of dollars in brand new technology, don’t leave the most crucial piece – implementation – up to chance.

Whatever the issue, a store communications solution with a two-way feedback mechanism can help catch these types of problems as soon as they happen. Or, consider leveraging a communication platform’s task management or store auditing capabilities to collect this type of information up front, as it will be easy to spot large-scale trends quickly and take action accordingly.

Help frontline teams feel prepared and supported.

Retailers already know that the key to deterring shoplifters is simply better employee training. Frontline associates who know how to spot the signs of a potential shoplifter, know how to politely intervene, and (perhaps most importantly) know when to back away are going to be your best defense against shrink.

Better training starts with a holistic learning strategy built for the day-to-day realities of retail. By reinforcing the effectiveness of employee onboarding through ongoing microlearning modules – served up in a way that’s easily consumed right from the sales floor – companies can improve productivity and retention. A store communications platform is a terrific way to accomplish this.

It’s also important to ensure your frontline teams understand exactly what’s expected of them during a (potentially dangerous) incident. We’re not talking about training teams to tackle shoplifters. In fact, we’re talking about the opposite: telling stores exactly how to keep themselves – and their customers – safe in the event of a smash-and-grab ORC event.

In this scenario, it’s essential that stores receive clear communication about expectations. A store communications platform gives you readership and task tracking capabilities, so you can ensure employees have fully read and understood important in-store policies designed to keep them, and their customers, safe.

Zipline is how best-in-class retailers bring brand strategies to life in stores. A unified platform for operational excellence, Zipline brings together frontline communications, task management, resources, insights, and more—so everyone feels connected to the brand and inspired by their work. Today, nearly 80 brands like Rite Aid and Sephora depend on Zipline to align and empower their store teams worldwide. Reach out to learn how Zipline can help you outsmart your competition today.

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