See the big picture
Although consumer spending remains volatile and higher costs continue to put pressure on margins, the retail and wholesale sector is optimistic about the opportunities offered by leveraging data to deliver efficiencies and respond to increasingly sophisticated customer needs.
Head of Retail and Wholesale, Barclays Corporate Banking
Although energy costs have subsided and inflation abated, the industry is still facing some pretty serious headwinds in terms of costs, with increased business rates and a rise in the national living wage (NLW) due to take hold in April 2024. Many of the businesses I talk to are looking to drive efficiencies by reviewing their store portfolios to ensure they’re sustainable in this challenging environment. They’re also seeking opportunities to add value to their customers, for example by adding click & collect services or partnering with other brands to attract more footfall and spread costs.
The industry will be anticipating a knock-on effect from the increase in the NLW, as employers come under pressure to raise wages further up the ladder. I know many businesses are carefully considering their labour cost base, looking to automate where possible and developing retention strategies that reflect what’s important to their employees. For some this will mean offering additional benefits, focusing on staff wellbeing or underlining their commitment to environmental, governance and social (ESG) principles.
Retailers are becoming increasingly sophisticated in their ability to capture data across both physical and online channels. However, many tell us they lack the integration between systems – stock management, logistics, supply chain and customer journey – to deliver a single view of the customer and the organisation. I believe we’ll be seeing many more organisations invest in this area in the year ahead.
To provide that holistic view of the customer and their operations, retailers will be looking to squeeze every possible insight out of the data to drive efficiencies and deliver a more personalised and relevant customer experience. A greater understanding of where consumer behaviour is heading will be key to selecting optimal store locations, setting the right price points, and refining marketing strategies to capture share of wallet in 2024.
Retail businesses are upping their game and gathering huge amounts of data – now the question is how best to extract value from it to boost business performance and better cater to their customers’ needs.
Head of Retail and Wholesale, Barclays Corporate Banking
Feeling the squeeze between retail and manufacturing, wholesale businesses will be striving to remain relevant and protect their margins in the supply chain. Whatever their sweet spot – managing logistics, distribution, warehousing, sourcing, or product design – wholesalers need to find areas of the business where they can add more value. This could be leveraging economies of scale to offer pricing advantages, offering storage and inventory management solutions, customised packaging, or product design and expertise.
I think we’ll see an even greater focus on ESG targets throughout the value chain in 2024 – a key area of opportunity for wholesalers to demonstrate added value. While the drive for sustainability comes from customers and retailers, wholesalers play a key role in making it happen. Being able to provide a complete audit trail to prove that raw materials are sustainably sourced, manufacturers operate according to environmental standards and workers are being fairly treated is a challenge that will require investment in people and systems.
To offset rising costs, businesses should be thinking creatively about how to maximise the value of their stores while developing alternative reward programmes to keep their workforces engaged and motivated.
Organisations should be investing in integrated technology solutions to provide a unified view of customers and operations, making the most of artificial intelligence to drive insights and inform marketing and operational strategies.
Wholesalers should ensure they have people and data systems in place to capture a holistic view of all partners, processes, logistics and raw materials in the supply chain, allowing them to demonstrate performance against key ESG metrics.
Keeping fraud front of mind
Fraudsters are as active as ever across the retail and wholesale sector, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
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The rising cost of living is, understandably, impacting the way consumers shop. Focus for UK retailers should be on innovation if they are to create operational efficiencies, deliver the optimum customer journey and raise their sustainability credentials.
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