Retail: 2012 vs 2020

As with 2020, 2012 was a tough year for retailers with the rise of digital shaking up the market. This year we have seen a new catalyst disrupt the retail sector, but the resulting impact is another magnitude of digital transformation which simply cannot be avoided by retailers. We decided to take a look at the problems retail technology leaders faced then and now and analyse how the challenges are very much the same today.

Digital is essential

The retail industry is one of low margins, meaning there is a very fine line between success and failure. Because of this, businesses are under increasing pressure to reduce spending and stay ahead of their competition, which has undoubtedly been aggravated as the (dare we say it) pandemic continues.

This year job losses in the retail sector are forecasted to plummet as they did in 2012, but on a far worse scale. The Centre for Retail Research estimates up to 240,000 job losses, or, 125,000 less jobs in the sector as there were last year.

At its peak in May this year, online sales accounted for 32.8% of retail sales, which is perhaps reflective of the closing of “non-essential” stores in the UK. This figure has nearly doubled since May 2019 – concrete evidence that consumers have shifted to online shopping as both a necessity and replacement for in-store ‘retail therapy’ this year. Looking all the way back to May 2012, when the figure was a mere 9.1%, the trend is clear: ecommerce is not going to cease its proliferation.

Against the constraints of the current economic climate, the use of technology within retail organisations is vital for both survival and growth. Consequently, technology leaders in retail must constantly re-evaluate their business’ strategy in order to improve their performance and reduce costs. Excellent online performance is now vital in persuading customers to stay loyal, and so retailers are required to continuously invest in in their capabilities. However, technology is ever-changing, so how is it possible for organisations to continue to meet rising demands whilst keeping costs low?

How to measure benefits and ensure ROI

Before undertaking any new digital development initiative, a retailer must understand the climate in which they’re currently operating: how it will affect them financially, how it will affect the end user, and whether it will increase revenue. 2020 has been turbulent to say the least, so such information has become increasingly difficult for businesses to predict.

However, it’s the responsibility of the retailer’s leadership team to acknowledge and address their weak spots, investing in technology to overcome them. Although this is easier said than done, it presents an opportunity for retailers to deliver a new tech strategy, which can add new value to their customers’ experience and strengthen their loyalty.

By understanding the market climate fully, retailers can make informed decisions which will enable them to improve efficiency and ensure that every pound spent will have a direct and positive impact on the business.

Jon Cleaver, CTO at fashion retailer In The Style, speaks about how their mobile software development partnership with Godel enabled them to significantly increase their ROI –

“The solution wasn’t something we owned… which meant we were hooked into quite an expensive rolling contract that meant gaining an ROI was difficult. There wasn’t much we could do to optimise conversion there.”

Jon continues “I’d say now we have something that competes with the best in the marketplace – that’s against businesses 20-30x our size. We are seeing customers return to our app more than ever and enjoying the fruits of revenue that come through that.”.

With such pressures that every pound spent must have a positive effect on the business, it is vital that departments can adjust and cope with new requirements. There can be a reluctance from more traditional organisations to seek technology skills from outside the business, but in an ever-changing world, this is often the best option.

On the contrary, digitally led retail brands have been able to reap the benefits of their tech-centric strategies which they have instilled within their businesses. Retailers must recognise where the use of tech could be optimised within their business, using it to deliver an experience that balances modern innovation and traditional brand values.

Godel client Sofology experienced difficulty with recruiting the right tech talent. Gavin Nickerson, Head of Technology at Sofology, speaks about how they began to overcome this challenge – “we simply can’t do it on our own – we don’t have the resources, so I began looking for a partner to help ramp up capabilitiesThe Godel team will begin working on the strategy to improve the online experience for customers, but I see this as very much the start of our relationship” 

Not only does this prove Godel as being able to ramp up software development capabilities for organisations as and when needed, but also highlights our stance as a long-term strategical partner. The longevity of the relationship combined with its communication-led agile delivery model allows Godel development teams to understand the retailer’s business needs in the same way their in-house teams do. As a result, software quality and delivery velocity continuously improve.

The technology benchmark

2020 has seen a huge increase in retailers offering their products online, meaning they have had to increase their capabilities in order to cope with this need. As we are surrounded by Black Friday deals once more, it has been predicted that there will be a 35-45% increase in online retail sales in comparison to the same week last year (23rd – 30th November), due to the intermittent closure of “non-essential” shops, but will their systems be able to cope with this spike in demand?

With the increase in online retail sales in mind, it’s vital that business’ online customer services are better than ever. Technology should be the enabler for all improvements to customer interaction, whether this be pre- or post-sales, as this will enable organisations to differentiate themselves from competition. The way people perceive retail brands is a big factor in which they choose to purchase from. If consumers believe a brand’s services aren’t up to today’s standards, then the chances of them purchasing products from them are slim.

As such retail businesses can no longer simply ‘keep the lights on’ in their IT departments. In-store experiences are still important, but today they must be supported heavily by technology. Retail software platforms like Godel client Dee Set enable supermarkets to sell more by ensuring premium product positioning, stock availability and an effective customer journey. Like retailers themselves Dee Set are embracing digital change, as their CEO Greg Phillips explains,

“We’re making a significant investment in the digital transformation of our business in order to stay ahead of the market and to help our clients grow and delight their customers.

“The development of these new innovative platforms coupled with our Industry leading expertise in Data Science, Artificial Intelligence and Machine Learning capabilities will help to bring about our enhanced competitive advantage and we’re excited that Godel are part of our digital transformation journey.

The success of digital brands like Dee Set, which support retailers via their technology platforms, prove how technology is now embedded at the core of the industry – and how therefore it must be a priority from an investment perspective.

Partnering – the way forward

As with 2012, we are living in an unsettled economic climate, which is affecting the retail industry deeply. Despite the differing causes of the troubled economy, what remains is the ability of retail organisations to respond to the challenges that are presented as a result of the downturn. In order to do so, they must be flexible and agile as a business, which should be supported by the capabilities of an organisation’s software development teams. Often in-house teams are not able to achieve this – for so many retailers finding and retaining the right people to support delivery at scale is one of their biggest business challenges.

Building a long-term relationship with trusted software delivery partners has been the way forward for retailers like Boden, In The Style and many others – working with their incredible in-house development teams to deliver software that is at the forefront of their markets.

To find out more about Godel’s software delivery partnerships with retailers across the UK, click here.