By Andy Friedland, Chief Revenue Officer for Swiftly
As the economy continues to ebb more than flow, retailers are feeling the sting as inflation impacts their customers and their bottom lines. To stay competitive, many have taken the opportunity to refocus their priorities by implementing digital solutions that will help them hold their space in the market, build customer loyalty and add margin-rich retail media programs to their existing initiatives.
When you look at the big retail players—like Walmart and Amazon—who embraced retail technology early and with great success, it’s the right move for retailers, but it needs to be done the right way.
There’s a high margin for error if companies don’t approach their digital transformation wisely. For investors, finding the retailers who are doing it right can be tricky… and identifying the ones who are doing it incorrectly is imperative. In today’s market, we’re seeing two avoidable mistakes retailers are making, and they could mean the difference between a sound investment and a bad one. You just need to know what to look for.
Mistake #1: Prioritizing One-Off Builds Over a Holistic Platform
The resources it takes to build a successful, omnichannel retail technology platform are vast. Aside from retail giants and popular e-commerce leaders, most companies don’t have the infrastructure to build a smart, scalable platform in-house, although many will try.
The reality is that most companies aren’t on a path to scale. Limited engineering resources and budget restraints find a majority focusing on speed-to-market and cost over scale. This is a huge mistake if they’re looking for solutions that will serve them long term. The trend toward "one-off" builds, supplied by multiple, unrelated partners, may deliver short-term results, but is essentially a house of cards waiting to collapse with the next wave of industry innovation.
Building a strong, successful retail technology platform must be done through a holistic, tech-centric lens that balances scale and integration. This results in an ecosystem play that sets companies up for seamless interplay between all their digital properties. The secret is finding ways around the challenges without compromising the scalability of each component.
To clear the engineering hurdle—especially in the beginning—companies should look for technology partners that can provide easily integrated, complementary tools and solutions that support long-term, scalable growth. The key is to make sure they’re not relying too much on haphazard integration with too many companies. This misstep can quickly end up repositioning them as a VAR (value-added reseller) rather than a valued partner.
As for budgets, the right partners will provide cost-effective solutions that deliver to long-term goals. Investing in the scalability of their platform from the very start is the only way for retailers to remain agile and competitive as customer expectations, industry trends and technology solutions continue to impact the market.
Why It Matters
If the different tools and solutions within a company’s platform can’t talk to each other, they’re not serving the real purpose for which they’re intended. One-off builds create tech silos that don’t give companies a full view of their business and create pain points in the customer experience that compromise loyalty.
Without a strong, scalable platform, retailers will be in constant, reactive cycle of re-investing and re-creating as changes in the market become more difficult and more expensive. When planned correctly, however, problem solving is less challenging, integration becomes easy, and success is attainable regardless of what the future holds.
Mistake #2: Not Using Data Properly
The pain points of a poorly integrated, non-scalable platform don’t just apply to the customer experience. Without all the right pieces in place, retailers can’t move with the market, creating additional challenges in their vendor relationships, loyalty initiatives and ability to drive long-term revenue.
While fully integrated solutions provide retailers with valuable real-time data, many aren’t leveraging the information to its full potential. This single mistake can impact key aspects of their operations both in the short and long term.
The simple fact is that first-party data can and should be a front-line tool as retailers navigate ever-evolving market trends and consumer habits. With the industry spotlight shining on everything from hyper-personalization to privacy, companies must lean into the insights they get from their owned digital properties to compete for market share, fueled by customer loyalty.
Additionally, as consumer privacy is protected by more rigorous rules against third-party data and insight sharing, first-party data will become even more necessary to inform decision-making across the board. Without it, everything from loyalty initiatives to vendor relationships could suffer from lack of insight-backed planning, directly affecting key revenue and growth goals.
It’s an unfortunate reality that many retailers, in their haste to get to get their platform up-and-running, didn’t do their due diligence in learning to leverage the data. In the end they’ll find themselves at a measurable disadvantage as it pertains to their customer retention and their bottom line.
Why It Matters:
The trickle-down effect of poorly utilized data can impact numerous critical aspects of a retailer’s business. First and foremost, in a retail climate where loyal customers are becoming more evasive as they shift between retailers for savings, companies must be able to connect with them in a hyper-personalized, targeted ways.
But it doesn’t stop there. The bridging of loyal customers to partner brands impacts a retailer’s vendor relationships, retail media initiatives, and inventory planning. One thing contributes to the next and the only way to keep the flow seamless is to keep an eye on the data and to plan successes accordingly.
The Bottom Line
Next-generation retail growth will continue to ride the wave created by technology. There are a lot of exciting things happening in this evolving space, both for retailers and for future-focused retail tech companies. For investors, this offers a huge opportunity to get behind innovative, tech-forward companies as they continue to impact and influence the future of retail, you just need to find the right ones.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.