Profit warnings from leading etailers demonstrate the battle doesn't just lie in online v physical, but in challenges faced by the industry as a whole.
For a long time it has seemed as though the challenges for online and traditional physical retailers were wildly different.
However, recent profit warnings from leading online retailers such as Asos have sent shockwaves through the industry, demonstrating the challenges faced by the retail sector as a whole.
Tech prioritised over workforce
In 2018 Hitachi Capital Consumer Finance published A Blueprint for Retail Investment, following an in-depth study into investment priorities for the industry.
It highlighted a significant shift to investment in technology across both online and physical stores as pressure builds to innovate amid business rate rises, depressed consumer spending and broader concerns around the health of the UK’s high streets.
“Automation, artificial intelligence and augmented reality are now considered the key investment priorities by nearly 70% of all retailers, outstripping human factors such as skills and workforce expansion”
New technologies such as automation, artificial intelligence and augmented reality are now considered the key investment priorities by nearly 70% of all retailers, outstripping human factors such as skills and workforce expansion.
This is a trend we will continue to see over the next 12 months, as retailers look to stand out in a crowded market, reduce operating costs and strive to create a frictionless journey for all customers, regardless of how they shop.
We already know from our own research that 80% of shoppers make decisions based on the credit options available at point of purchase, yet many retailers still underestimate the role this plays in acquisition and retention.
This will change as open banking and the application of more granular behavioural data in credit decisioning will help retailers that offer credit strengthen their position.
This could also be the year that blockchain becomes the norm within the supply chain. Our research found that 54% of retailers are already using or considering the use of the technology within their business to help prevent fraud and improve trust in product provenance.
The jewellery sector already uses the blockchain-based Tracr platform to track high-value diamonds along the supply chain and we are likely to see wider adoption across the industry.
These findings are hugely encouraging, but investment in technology can only be effective when we come back to the consideration of the customer.
The key to all of this is the frictionless customer journey. It should be the goal for every retailer, whether bricks and mortar, online or multichannel.
Vincent Reboul is managing director of Hitachi Capital Consumer Finance