Unified Commerce: How Intelligent Store Operations Helps Solve Retail Challenges
In today’s retail climate, when increasing headwinds threaten to slow down economic growth, one thing remains unchanged – the growing expectations of customers.
With convenience at their fingertips, customers now expect their in-store shopping experience to emulate online shopping. The trends triggered by these customer demands are going to continue, impacting not just spending decisions, but also brand loyalty. This, coupled with behavioral shifts in customer preferences serve as a wake-up call to retail companies; compelling them to adapt transformative trends and build a “connected retail experience”; one that integrates online shopping with the store experience to drive revenue growth.
Place customer data at the heart of every business decision
Features such as buy-online-pick-up-in-store and ship-from-store are absolute table stakes for retailers in this new reality. While some of these trends - the increased focus on unified commerce - have been in motion for years, execution has remained sluggish due to a lack of digital readiness in IT infrastructures.
Although retailers use technology in the form of traditional ERP, such applications often don’t integrate every aspect of a retailer’s business. For instance, when brands receive orders through multiple channels, it can overwhelm their systems and cause delays or errors —both of which can lead to dissatisfied customers who may not return. Legacy ERP systems also require a lot of manual intervention to counter the lack of inventory transparency.
In such an environment, a scalable digital ecosystem can play a valuable role in providing frictionless experiences to their customers. This way, brands can integrate all data, from warehouses and distribution centers to stores and e-commerce to serve their customers at any given moment, across all channels. The use of these innovative solutions not only enhances the in-store experience but also streamlines both front-and back-office operations, helping retailers from optimizing inventory management to personalizing customer interactions.
Against this backdrop, we believe there is an opportunity for companies to position themselves for success by taking advantage of emerging technologies, including:
Key Technologies Transforming Intelligent Retail
Retailers need to meet customers where they are but, to do so successfully, they need underlying technology to hold different systems together behind the scenes. A solid end-to-end digital structure is necessary for retailers to thrive.
At the core of this transformation is a robust cloud ERP platform that integrates these technologies to deliver an ecosystem that anticipates and responds to customer needs. As we progress through 2024, one key takeaway from our conversations with global retailers is a strong desire to build a scalable digital core to continuously leverage emerging technologies to build intelligent stores, while addressing longstanding industry challenges.
Store intelligence improves retail execution across different areas
Catering to consumers both online and offline places store operations under enormous stress, impacting all related aspects such as inventory management. Although these challenges are familiar to retailers, this new intensity has created a sense of urgency to identify and implement solutions to solve these issues.
Armed with the right data, intelligent store operations can help retailers solve their most basic operational challenges, whether it’s on-shelf availability or pricing.?These benefits are further amplified when the data is integrated with external sources such as POS. This seamless connection of data from siloed sources is key to realizing the benefits of an intelligent operation.
Below we look at a couple of ways in which building intelligent store operations can have an impact on customer experience and operations, highlighting some of the strategic priorities they face today:
Personalized and immersive shopping experiences are the new normal in retail. Intelligent technologies allow retailers to collect crucial behavioral data that can drive real-time personalized marketing messages. This way, customers receive offers and recommendations most relevant to their preferences, enhancing the overall shopping experience.
Traditionally, grocers try to capture this information through membership or loyalty card programs. However, making sense of this large volume of data is difficult and requires a modern digital ERP that connects to point-of-sale applications. This approach delivers a 360-degree view of each customer, enabling retailers to elevate their shopping experiences.
Manual inventory checks are time-consuming and tedious for employees. According to a RetailWire study, retailers lose $1.1 trillion globally in revenue due to overstocks and out-of-stocks. Frequent out-of-stock situations can frustrate customers, driving shoppers to find other options. Intelligent inventory management can help address this challenge by accurately predicting demand fluctuations. This ensures shelves are always stocked with the right products, thereby maximizing sales opportunities and customer satisfaction.
Studies show that roughly 15% of food waste occurs at the retail level, often due to temperature fluctuations or improper handling. This often leads to lost profits and impacts a brand’s reputation. But a digitized supply chain – one that is integrated end-to-end - can deliver the degree of speed and efficiency grocers need to minimize waste. ?According to SAP Performance Benchmarking, this can reduce supply planning costs by 30%, food waste by 40%, and total logistics costs by 25%.?
Repetitive tasks such as inventory checks drain employee productivity. By empowering front-line sales staff with real-time customer, product, and inventory data, retailers can turn stores into experience centers. Supported by automated processes, this results in more productive, knowledgeable, and satisfied employees.
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Challenges that retailers face in building intelligent stores
Lowering prices, reducing shipping times, out-of-stock, misplaced inventory, and supplier issues – these are typical challenges retailers face and often some workarounds help retailers address these operational inefficiencies, at least to some extent. But the problems arise when retailers begin to scale. The sheer volume of data makes it challenging to maintain a comprehensive understanding of each unique customer interaction. Let’s look at some of the biggest challenges retailers face as they strive to achieve intelligent store operations:
1. Complex integration
Retailers frequently struggle to achieve seamless integration across all channels, a key aspect of unified commerce because practical implementation can be complex. Ensuring the system functions well across online platforms, brick-and-mortar stores, mobile apps, and other channels requires robust integration capabilities and a cohesive strategy. Without seamless integration, retailers risk inconsistencies in pricing, inventory management, and customer service, ultimately impacting the overall customer experience and their bottom line.
2. Legacy systems and disconnected data
Many established retailers feel constrained by outdated systems, struggling to compete with agile new entrants whose IT infrastructures are designed for today’s digital landscape. Retailers have traditionally managed issues with their core systems by customizing and adding components, but this approach has led to problems. Updates to the core system often disrupt these additions, requiring reconfiguration before the update can be completed. This cycle of constant customization and patchwork solutions has made core system updates both time-consuming and costly, often resulting in systems that don’t work as intended. For an increasing number of retailers, this approach has become unsustainable.
3. Manual processes resulting in latent information and waste of talent:
Manual processes in any aspect of retail are unfeasible in today’s economy. Using spreadsheets or paper to track inventory, manually reentering e-commerce orders into POS systems for in-store pickup, or uploading emails into a CRM reduce productivity and increase errors.
?Automation is key for processes across purchase orders, inventory tracking, allocation, and returns. A high level of automation prevents errors and frees employees to make more meaningful contributions.
4. Disconnected inventory data and supply chains due to siloed infrastructure:
Siloed infrastructure, where systems don’t communicate, leads to duplicated efforts. To make unified commerce work, you must know stock levels across all locations, including stores, warehouses, and 3PLs. Without this information, many aspects of today’s retail expectations become impossible. If you don’t know what inventory is available where, you can’t offer customers alternatives via other channels, leading to lost sales to competitors. Additionally, if stock information isn’t updated immediately, you risk promising customers items that are no longer available.
The same applies to supply chain management. Today’s supply chains are complex networks requiring precise coordination. Each supply chain node, from purchasing to inventory tracking to order management and delivery, must be connected for successful omnichannel execution. Transparency and consistent processes across all locations, including outsourced ones, are vital as siloes in your supply chain harm the customer experience.
The way forward: Using a common data model on a scalable Cloud ERP platform
Many retailers, especially those that began as pure brick-and-mortar shops, realize their current technology environment no longer adequately supports their business vision. However, historically, retailers have been risk-averse and under-invested in new technologies compared to other industries. But this is changing. In our experience working with global retailers, we are seeing a fundamental shift where data is now viewed as a strategic asset.
Key takeaways for retailers:
As a go-to SAP partner for retailers, we work with grocery retailers to curate their data and integrate data from external sources, creating significant advantages over traditional competitors. This empowers users with real-time visibility into their environment, enabling them to simulate the impact of business decisions, mitigate risks, and achieve better customer outcomes.
Technologies like SAP S/4HANA enable real-time access to data, allowing retailers to gain insights, predict trends, and make informed decisions.?This foundational core platform enables innovation through scalability, adaptability, and speed to value, which can help them move forward with introducing new experiences for customers, employees, and partners.
Based on our experience, having a core foundation for growth can help retailers:
Here are some of the grocery retail case studies that demonstrate the value of leveraging a common data model across all retail operations:
Building intelligent store operations is crucial for modern retailers to meet customer expectations to stay competitive. By leveraging a robust cloud ERP platform that integrates technologies, retailers can address challenges related to integration, legacy systems, and solution scalability to transform their operations and enhance customer experience.
To learn more on how to implement intelligent solutions like SAP S/4HANA Retail Retail that help retailers address evolving customer needs, you can get in touch with us here.