Q:
How are retailers thinking about e-commerce vs. brick and mortar after the last few years of turmoil?
A:
It’s a mistake to think about it as either/or. People still talk about brick and mortar and e-commerce as though they are separate entities, but really, they are interlinked. Omnichannel is the only way for companies to continue to exist. Originally, e-commerce was supposed to save retail. But with costs going up, supply chain issues increasing, and the cost of acquiring customers soaring, pure play e-commerce can be an astronomically expensive proposition.
E-commerce is a vital, essential ingredient for retailers, but in and of itself it has its own disadvantages.
Q:
How do you see retailers implementing next generation technologies? What role do you see AI playing in retail?
A:
There is a constant need for innovation. A few years ago, everybody was talking about blockchain, then metaverse, and now the shiny new object is artificial intelligence (AI). Earlier this year, Goldman Sachs estimated 300 million jobs could be lost or diminished due to AI. That sounds pretty horrific at first, but when you think about it from an opportunity perspective it creates cascades of growth and improvement.
If you can eliminate 15% of back-of-house jobs and put more focus on front office service (which allows for better engagement in stores, or the addition of new capabilities such as 24-hour delivery), that is a tradeoff most retailers will gladly make.
Q:
What will happen to retailers not willing to embrace AI?
A:
Any company that is not currently engaged in embracing the possibilities of AI is behind the eight ball and will likely be left behind, because the service advantages of AI are enormous. Much of the focus of AI has been on the fear that it will cost people their jobs, but it is not that simple. In retail AI has the possibility to automate many tasks that are currently performed by humans and create new opportunities for better service and better customer experiences.
We are really only just at the beginning of the AI journey, and it’s going to have an even bigger role to play in coming years.
Q:
What is the state of the retail industry right now, given economic uncertainty, rising inflation and continued labor issues?
A:
Investors are beginning to put a lot more pressure on retailers and brands to prove their profitability. They are also asking harder questions about debt risks, conducting viability checks, and demanding answers from management teams who are struggling to turn a profit. One of the natural outcomes of this is an increase in CEO turnover.
Across the industry, experienced CEOs who know how to execute and deliver results are in high demand.
Q:
Having reached the halfway point of 2023 how do you think retailers will fare through the remainder of the year?
A:
The fact that the debt ceiling debacle has come and gone is a good thing. The economy has been challenging, but we haven’t tipped into a full-blown recession as naysayers predicted.
For the year ahead, it will be survival of the fittest. Retailers who are burdened with too much debt and hanging on to old business models will struggle. Those who are pursuing innovation will continue to grow and thrive. I am optimistic about retail in the year ahead for those businesses that have embraced technology.
