Retailers have no margin for error

Consumers want cheap products. Retailers compete to offer the lowest prices. And that has driven margins in the retail sector down to rock-bottom levels over recent decades. With new levels of digital disruption in the industry, from online retailers and customer-centric startups, margins are set to become even tighter.

For low-cost retailers, the challenge over the coming years will be to use data more effectively. They need to understand what customers want in advance, and link that data through to procurement, manufacturing and the supply chain. Inventory management will be the big differentiator: getting the right quantity of the right product into the right stores at the right time.

At the high end of the market, data will be just as important. To justify luxury prices, retailers need to offer luxurious customer experiences, such as seamless, personalized omnichannel service. There is no way to offer that without well-organized data and actionable insights. Inventory management is essential here too, as customers who are willing to pay more for products will also expect them to be available near instantaneously.

I’ve recently been looking at the data challenge for retailers in Northern Europe along with Michael Larsen, Martin von Schantz, Vigdis Tvei, Nino Bergfeld, and Loic Chaboud. Here’s the article we’ve written about the future for the industry. I would love to hear thoughts and responses from anyone in my network. https://www.linkedin.com/smart-links/AQEIso9tibhTog