16/09/2024

5 essential retail strategies to future-proof your business

E-Commerce Retail & Consumer Goods Blog article

Authors: Dennis Looks & Fiona Marie Hein

A wave of transformation is sweeping through the retail industry. Bringing it firmly into the digital age depends on five key retail strategies: optimising the end-to-end supply chain, harnessing the power of generative AI, upgrading digital infrastructure, investing in physical stores and closing system gaps with AI tools. By rolling out technological improvements in all five areas, retail companies stand to benefit from healthier revenue flows, increased competitiveness, a more satisfied customer base and stronger growth over the long term. This is the future of retail – and it is happening right now. As an expert in designing end-to-end digital customer experiences, IBM iX is on hand to assist retail organisations that are ready to take the next step.

While the retail industry is always in a state of flux, the changes and challenges faced by the sector are more numerous than ever before. With the digital transformation in full swing, supply chains vulnerable in different areas, and a client base that demands an immersive end-to-end customer experience journey, retailers need to take steps now if they are to future-proof their operations and maintain an edge over their competition. Fortunately, there are five key retail strategies to transform an adequate retail operation into a sales behemoth: investment in brick-and-mortar stores, integration of generative AI, modernisation of existing digital infrastructure, strategic use of AI in key business areas, and end-to-end supply chain optimisation. The results are myriad, ranging from improved revenue streams to more loyal customers.

1. Physical stores remain king – assigning a person to an age group

While it may seem counterintuitive in the digital age, retailers who want to stay at the forefront of their industry cannot ignore the power of physical stores in driving sales. When the right investments are made, a physical retail space can boost brand recognition simply by remaining in the target audience’s eye, and create a holistic shopping experience – especially when paired with digital tools. A physical store offers numerous advantages:

As part of an omnichannel retail strategy, customers can buy online and pick up in store, return purchases and exchange products for others.
Local market penetration allows retailers to fulfill regional preferences and address certain demographics more directly, with inventories tailored to meet requirements.
Customer footfall facilitates data collection through, for example, point schemes, as well as tracking products and services that customers favor when on the shop floor.
Customer engagement between visitors and employees is easier when both parties are face to face. Expert, knowledgeable staff can help to build brand loyalty and develop trust among the customer base.

2. Generative AI as a star employee

Generative AI tools use specific models to create text, videos, images, and other data that, when applied strategically, can enhance the customer journey tenfold. Recommendations tailored to an individual’s preferences or needs, for example, increase the chance of a sale, while other tools can predict demand curves and prompt a retailer to adapt its inventory accordingly. Elsewhere, composable commercial architectures – modular components comprising microservices and applications – can help a retailer to scale its operations without sacrificing elements of the personalised customer journey that drew individuals to that retailer in the first place.

3. A deserved upgrade for digital infrastructure

For retailers to keep pace with their competitors, they need to invest not only in their physical stores but also in the digital channels that bring those stores to life. Next-generation networking can boost internet connectivity on-site – whether in offices or on the shop floor – which improves real-time inventory management and customer interactions. By overhauling digital infrastructure to make it fit for the future, retailers can incorporate comprehensive data collection and analysis into their operations and make it a cornerstone of any future strategy. This data can be used to personalise the customer journey, forecast demand accurately, and optimise the business’s supply chain management processes. Edge computing, a distributed computing model that speeds up data processing and reduces latency, can likewise be implemented given the myriad benefits it offers to the retail environment: personalised promotions, interactive digital displays, more efficient checkout processes, and more. Together, these digital technologies help to create a seamless, integrated retail experience and a worthwhile customer journey, while enabling retailers to adapt rapidly to market changes and consumer preferences.

4. Overcoming legacy system challenges with ease

It is the nature of the industry for retailers to work with legacy systems that are difficult to phase out while maintaining seamless operations. This is where AI tools enter the picture: by embedding AI directly into workflows, retailers can bridge the gap between cutting-edge digital infrastructure and legacy components. This allows them to maintain data continuity throughout their operations, which reduces blind spots and the need for manual work. This paves the way for data-driven insights that take the full picture into consideration, the identification of otherwise concealed patterns (which can then be leveraged), and the detection of anomalies that can be promptly addressed before they reach problem status.

5. Stronger links for a resilient supply chain

When it comes to retail strategies, inventory is second only to the customer in terms of importance. Accurate inventory management ensures the right products are available at the right time and in the right locations. Not only does this help to meet customer demand quickly, but it reduces stockouts and overstock situations, which in turn optimise working capital and make the lives of employees easier. At the other end of the spectrum, efficient returns handling allows returned products to be reintegrated into the inventory, which minimises write-offs. Another key focus is to manage shrink, or losses caused by theft, damage, and administrative errors, which can likewise be achieved through proper inventory management. All of these measures make for an optimised end-to-end supply chain where costs are kept within line, records remain up to date, decisions are made in full knowledge of the facts – and customers are satisfied at all times.

Shaping future-proof retail

These five key retail strategies are the recipe for a sustainable retail strategy that will bring any retailer firmly into the 21st century and render its operations fit for any challenge the future may bring. Thanks to the use of cutting-edge technologies such as generative AI, a more resilient supply chain, and strong investments in both physical stores and the digital realm, retailers can provide their customers with an end-to-end journey worth taking, leading to a more satisfied client base with stronger sales, galvanised employees, and greater long-term returns. For more information and guidance on how to create a holistic retail experience, get in touch with IBM iX today – your partner for a sales and service transformation whose outcomes are guaranteed to stand the test of time.

Retail & Consumer Goods

Consumers today want it all: holistic shopping experiences across all channels, personalised offers and sustainability. At IBM iX, we develop and orchestrate digital customer experiences end2end. Thanks to our deep industry expertise, we know the specific challenges of companies and customers in the Retail and Consumer Goods industry.

Retail and Consumer Goods

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Dennis Looks

Director Digital Strategy

Dennis.Looks1@ibm.com

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