Ever since the pandemic forced the closure of many brick and mortar storefronts, the future of the retail industry has been bleak. The outlook for 2022 has its own share of issues, including shipping, empty shelves in stores, inflation, and unprecedented employment problems.
Although, wherever there are challenges, there are also opportunities. Closures have forced retailers to do a thorough analysis of the systems that have existed in the industry for years. The pandemic has provided a chance to hit the reset button, leading to more stable industry standards, systems, and processes.
Retail Accounting Reform
One area of the retail industry in need of reform is accounting. Should the industry be able to merge its accounting methods, this could lead to more holistic retail and cost accounting practices.
Proxima360 is a high-impact solutions management consulting company that addresses critical business needs within the complex retail landscape. Proxima360 is leading the way in retail renovation and assisting businesses in creating a roadmap for a successful future.
“I believe the new normal is all about a harmonized retailer,” explains Anil Varghese, an enterprise analytics leader and CEO of Proxima360. “In this model, the customer gets to determine what they want, how they want it, and when they want it — all done seamlessly. A retailer who can provide that experience will win in the new normal.”
According to Proxima360, there are three primary issues facing retailers in 2022, including:
- Multiple accounting systems and perspectives across different departments
- Mixed retail and cost accounting – in one organization
- Absence of holistic accounting solutions requires a significant investment in ad hoc reporting
In light of these issues at the forefront of the retail industry’s current status, Proxima360 recommends retailers implement the following solutions:
- Key Retail KPIs
- New systems with shared, holistic KPIs across the organization
- KPIs to ensure one shared, Omni view of sales, inventory movement, growth, and customer satisfaction
- Inventory evaluation during markdowns to help manage open-to-buy accurately
- Dashboard and KPIs for all metrics across all departments’ platform
- Consolidate functions across departments, create a holistic reporting platform allowing departments to review and react to metrics
- Import historical data to help businesses analyze current trends versus comps
Amazon versus Brick and Mortar
As physical retail stores adapt to the continued growth of powerhouse platforms like Amazon Prime, the question looms; will retail stores or malls continue to exist in a post-pandemic ‘new normal’?
“Just before the pandemic, the topline from brick-and-mortar stores was 90 percent,” says Varghese. “The physical spaces are not going to go away; they’re just going to change. Malls will be more of an experience destination, rather than just shopping centers filled with products. The physical spaces will have a different meaning and purpose than what we know today. Physical stores would, primarily, act as showrooms or pick-up centers compared to a store with a full assortment of products. Today’s store in a shopping mall will be replaced by virtual solutions.”
There are signs of optimism amid change. In a recent report from Deloitte, “2022 Retail Industry Outlook,” respondents were optimistic about revenue growth. 54 percent expected an increase of up to 5 percent, and 32 percent predicted growth of 5 percent or more. Close to one-third of executives surveyed expect higher operating margins year over year, while 38 percent expect margins to remain stable.
The savvy retailers are looking for ways to turn this time of change into an opportunity for growth — 58 percent see inflation as an opportunity to raise processes and improve margins. With limited products to sell, some businesses have stopped promotions which boost profit margins. Others have looked ahead, and are closing unprofitable locations and reducing inventory.
“The customer is always right.”
While businesses seek to reinvent the wheel, some business philosophies will remain valid. “Listen to your customers and engage with them constantly, educate them about your product and services,” says Varghese. “In the long run, customers always trust the quality and the experience. Focus on what you can control, and be agents of change. The rest will eventually fall into place.”
Indeed, the coming years will find retailers facing challenges and opportunities to restructure and strengthen their businesses. This will require new practices and ways of thinking about how retailers conduct business.
The pandemic has permanently changed consumer purchasing behavior. Businesses that will adapt will be the ones to succeed in the future. In this era of flux and instability, they expect 2022 to be a turning point, ushering in stabilization in retail and eCommerce spending and solidification in shopping habits.
Proxima360 is a high impact solutions management consulting company. They address critical business needs within the complex retail landscape. Their holistic approach in implementing retail solutions will optimize operations and improve revenue. Proxima360 is a preferred advisor and solutions provider for nations top retail brands meeting their operational desires with their technical needs. Proxima360 is here to advise, implement, integrate & support the complete Oracle Retail Solutions Suite.