Study: Poor technology planning will cost retailers $300k this holiday season
Retailers that fail to invest in technology to meet peak holiday demands will land them right on the naughty list with holiday shoppers.
In fact, these poor decisions could cost retailers more than $300,000, according to a study from retail management systems provider Brightpearl. The survey tapped more than 350 senior retail decision makers across companies ranging in size from small to very large.
According to data, retail automation technology helps retailers save the equivalent of 57.5 days a year by eliminating time spent on repetitive administrative tasks. The likelihood of negative customer service because of human error has also been reduced by up to 65%.
That said, mid-market retailers’ and wholesalers’ “technology ignorance” will give them a clear disadvantage in meeting peak holiday demands — especially compared to online and large retail giants. These decisions will lead to poor customer experiences, the inability to fulfill orders or meet increased demands due to lack of process automation, and inefficient business operations.
“These findings highlight how many retailers neglect to invest in technology that could save precious time and money during their busiest season,” said Derek O’Carroll, CEO at Brightpearl. “This doesn’t bode well for mid-sized retailers who find it challenging to compete with the likes of Amazon Prime — especially if they continue to ignore the operational advantages of technology. Short-term, inefficient solutions like hiring more staff or increasing inventory levels often end up hurting their bottom line.”
When it comes to hiring, 53% of retail decision-makers believe they can remain competitive by simply hiring extra staff. On average, they hire the equivalent of 98 full time additional seasonal staff to manage busy shopping periods. The top 50% hire approximately 190 holiday staff. The business costs of hiring 98 full-time employees based on average minimum wage of $7.98 at 40 hours/week per hire.
Retailers employing extra staff members to help during the 10-week holiday season running Thanksgiving through New Years can expect to spend, on average, an additional $312,816 (or $3,192/hire) in wages alone. (This does not include taxes, the burden of training new staff, costs incurred from mistakes by inexperienced employees, and extended work hours for existing staff, the study explained,)
Beyond hiring, 40% of retailers will increase their inventory significantly to cope with peak periods (despite the potential for wasted resources). Meanwhile, 35% of retail decision makers are ‘very likely’ to adopt a new technology solution that would help to effectively streamline their back-office and inventory processes. Further, 58% of retailer and wholesale decision makers currently invest in technology to manage sales spikes.
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