If we learned one thing from 2022, customer behavior and lifestyle desires must be the north star for retailers to remain relevant and profitable. From the shift of travel and return to office, to inflation and excess inventory, customer behavior dictated and disrupted the headlines of 2022. Retail supply chains did their best to keep up and pivot. Companies with a pulse on their customer signals and macro-environment events were able to adjust their supply chains to respond by anticipating, personalizing, and fulfilling what, when, and where customers wanted to buy.
Trying to keep up with the latest disruptions in 2022 exposed weaknesses in many companies’ ability to listen and respond to data. Here’s a look at where Blue Yonder sees retail trends heading in 2023:
Many retailers are working diligently to right size their inventory with customer demand. For upcoming Spring/Summer buys, we will see a more cautious outlook for purchase orders. Companies learning from last year’s large upfront investments to circumvent rising costs, will shift to a different model in 2023 – one that is delicate and agile for inventory investments. We will see more companies hold back funds to test the market with initial orders and quickly recalibrate to customer response using data-driven decisions to determine where to re-invest the available inventory funds, leveraging faster speed to market to realign the strategy.
Rethinking Inventory Investments
Many companies realize the systems they have in place are not modern enough to manage the complexity of selling in five or more channels simultaneously and applying the customer data to curate and personalize the offer in each channel.
Testing the Market with New Channels
In parallel, as momentum grows around expansion into new digital markets with marketplaces, social, and live commerce channels, retailers will have new ways to reach customers where and when they want to shop. This provides a path to testing new markets and product decisions in 2023 and leveraging inventory across more opportunities to reach the customer. These new selling channels allow retailers greater control over the brand experience and ownership of the data.
Utilizing Customer Experience Driven Data
Early adopters in expanded selling channels often learn customer data is no longer focused on products decisions, instead, the customer buying experience is just as important in converting new customers into repeat customers. Consumer data now includes the customer’s location, fulfillment selections, and learnings about the journey to get the order into their hands. Data around the fulfillment experience is growing in importance to tailor for high value customers, improving for the next time, and standing out in the crowd of competition.
Composable Experiences and Systems
As retailers lean into this new selling model for 2023, they must stretch less inventory across more selling channels, with the goal to do more with what they have without investing in larger inventory orders, instead balancing investments in new customer driven strategies to offset growing cost to serve.
Many companies will realize the systems they have in place are not modern enough to manage the complexity of selling in five or more channels simultaneously and applying the customer data to curate and personalize the offer in each channel. New channels and customer experiences might not be possible without rethinking the systems supporting these experiences.
Companies are finding they need composable systems that are easy to adopt and can correlate, translate, and leverage data from new digital selling channels to better understand the consumer profile and lifetime value, then applying the data to elevate the customer experience, making better decisions on products investments, localized inventory placement, and sensing to support flexible fulfillment agility – ultimately leveraging all the inventory available in the network regardless of what channel the customer wants to buy from.
By offering a modernized customer experience and work experience for employees, retailers that can make this pivot across their team structures and technology, create a curated customer offer, fulfill through integrated supply chain processes, and ensure their customer’s journey will be the ones to stand out in the crowd in 2023.