At a glance
Leading a retail business can often seem like a delicate balance between fighting short-term fires and simultaneously laying the foundations for future growth.
Right now, the word on every leader’s lips is inflation as the most significant hike in the cost of living for more than 30 years has dealt dual blows – retailers find themselves weighed down with higher costs, while consumers struggle to pay bills and put food on their tables.
Conditions not conducive to growth have been precipitated by a once-in-a-century global pandemic and the war in Ukraine, knocking economies across the globe and creating a ripple effect of higher costs and supply chain chaos.
However, resilient retailers that adapt, get their proposition right, know their consumer and invest in the right areas survive in the toughest of environments. In fact, many flourish.
This is what we found when interviewing leaders across 41 UK businesses and the leaders of three international businesses between June and August 2023.
The retailers we spoke to for this year’s Retail 2024 report – our highly anticipated, yearly state-of-the-nation and strategic retail forecast – have largely performed better than expected.
There is a sense of positive momentum going into 2024
They told us that rising costs, including for freight and labour, have impacted their ability to drive profitability in the last 12 months, but that they now see the light at the end of the tunnel as energy and freight prices fall. As a result, there is a sense of positive momentum going into 2024.
There are multiple predictions from the fiscal community suggesting 2024 will be less challenging from a macroeconomic perspective, and that is fuelling the confidence of the industry.
Everything is tinged with caution, though, as retailers have grown wise in the last few years about ever taking anything for granted.
As another new year approaches, stores remain the beating heart of the industry, while ongoing investment in various back-office systems, IT and branding remains crucial – even when revenue is being squeezed.
In tandem, online and finding ways to embed digital into physical retailing continues to grow in importance, as does the way in which employers treat staff and operate with social and environmental consciousness.
The good news is that many retailers have already put these building blocks in place and, with the economic forecast set to improve – albeit marginally – next year, the industry looks set to reap the benefits from this forward-thinking strategic approach.
Mark Thomson, director of retail and hospitality EMEA, Zebra Technologies
When we released our last report in 2022, we were in the midst of a cost-of-living crisis, a war in Ukraine and ongoing recruitment challenges as lifestyles and attitudes to work shifted following the pandemic. Retailers were facing some of the biggest hurdles in decades. But retail is a resilient sector and these tests have been met with investment in people, technology and strategic shifts towards digitisation and agility.
As we launch our latest report, some of those significant uncertainties and challenges sadly remain but on the positive side, inflationary pressures are easing, workforce availability is beginning to improve and shoppers are returning to stores. Rather than firefighting, retailer strategies are shifting to business optimisation and increased innovation, leveraging technologies to change the way work is done and bringing increased visibility to stores, supply chains and customer interactions.
Listening closely to our retail customers, at Zebra Technologies we recognise that staff are playing a changing but critical role in the transformation of retail. While retail now takes many forms, stores remain the beating heart and the key influencers in stores are empowered and engaged staff.
Momentum looks positive going into 2024 and, despite some negative news, many retailers are looking to open more stores and expect revenues to increase. They also recognise this will not be done without achieving certain transformational outcomes such as an improved view of stock in real time; communications and collaboration platforms that reach all staff, not just head office; and improved interactions with shoppers.
These are the challenges that Zebra Technologies has a clear focus on in our development of The Modern Store by Zebra framework, and we are actively engaged with many retailers in delivering improved outcomes.