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Navigating COVID Disruptions in Retail through Cost Optimization

When is the last time you made an online purchase or opted for delivery over dine-in at a restaurant? Nowadays, you can get almost anything you want delivered to your door with the click of a button. Not only is online shopping convenient, but it has become a necessity for many in the midst of a global pandemic.

However, as the retail industry changes, what does this mean for the companies who suddenly have to manage an influx of demand? For one, it has created a greater need for Technology Expense Management (TEM) and Managed Mobility Services (MMS) for cost optimization.

In this article, we will take a look at the current state of the retail market and how TEM and MMS can make an immediate impact in a rapidly changing industry.

Current State of the Retail Market

  1. Changing Consumer Behavior

Over the past 18 months, there has been a rise in digital commerce due to significant changes in last mile delivery. According to a recent report, COVID-19 has fast-tracked the shift to e-commerce by five years, as the demand for delivery services has surged during stay-at-home orders. In 2019, only 14% of retail sales accounted for online purchases. However, in just two years, the figure is now almost 20% marking an immense increase.

While digital growth has been slower with certain demographics in the past, almost half of baby boomers began shopping online more during the pandemic. And for those who prefer the added convenience from their car, BOPIS (buy-online-pickup-in-store) with curbside pickup is now commonplace at most stores and retailers. Retail organizations have had no choice but to adapt to these changes in consumer behavior, be nimble, and lead with innovation.

  1. Abrupt Changes to 'Brick and Mortar' Models

Changing consumer behavior means that there has been forced changes to 'brick and mortar' models. Many retail locations have permanently closed, and others are changing the way they use their store space. Countless retailers have had to update the mobile technologies in their stores, in order to equip their employees to serve their customers in new and different ways. This has all led to greater demand for companies to adapt technologies and find better systems to help them manage the increasing costs.

  1. Mergers & Acquisition Activity

There has been a trend where strategic M&A activity is driven by ‘localization’ or expansion into new markets, as well as the pursuit of technologies to gain access to new digital platforms. For example, the convenience store industry is consolidating, while some chains are experiencing rapid internal growth. This can prove beneficial for quickly adapting to the changing retail environment, but has the potential to create gaps in cost visibility.

  1. Technology Transformation

    It’s no surprise that retailers are transforming rapidly with the rise of technology and demand for online and home delivery services. Who wouldn’t want to jump on the trends and have their items arrive right at their doorstep? But as customer demand goes up, so does the need for better technologies and management systems.

"Retail is experiencing unprecedented change driven by consumer behaviors, enabled by technology and accelerated by a pandemic. Retail CIOs must embrace digital transformation and composability to support business leaders." - Gartner 2021 CIO Agenda: 5 Retail Digital Business Acceleration Trends

Not only do technology transformations reduce cost (like UCaaS and SD-WAN migrations), but they also allow it to be more responsive to the shopping behavior of customers. This allows for application-centric and centralized vs. decentralized network architectures to deploy more rugged and mobile devices.

How Can TEM and MMS Make an Impact, Quickly?

Let’s take a look at how cost optimization can help mitigate the disruption of COVID in your business. We’ve outlined the top three areas that can make the biggest difference in the retail industry.

  1. Control Communication Expenses

Managing communication expenses can help eliminate wasted dollars in your budget. This includes removing late fees, auditing for billing errors, and making sure billing stops for any stores that closed. It’s also helpful to renegotiate carrier contracts with better pricing and optimize (rightsize) mobile plans.

As stated by Gartner,

"Cost optimization is one of the primary ways that businesses have responded to the crisis. It’s a key contributor to helping keep businesses afloat during these unprecedented times, and it’s becoming a major pillar in many retailers’ “reopening playbooks” and operating models."Gartner, Top Trends in Retail Digital Transformation and Innovation for 2021

They elaborate further in the report by saying that "Failure to implement strategic cost optimization as a continuous business discipline will pose a fundamental threat to the business." In this regard, it’s crucial to implement these cost saving tactics to stay competitive in your market.

  1. Labor Efficiency 

TEM and MMS can make a quick impact in your organization by optimizing operational efficiencies. Augmenting manual human processes with technology helps create a human-machine hybrid of labor that reduces costs and ensures smoother operations.

Key areas where retail businesses can optimize processes:

  • Automate manual invoice processing. Convert invoicing to electronic billing; automate the complete invoice lifecycle; automate reconciliation of invoices against contracts and inventory.

  • Outsource the AP / invoice payment functions.

  • Outsource mobile device logistics to minimize employee down time, keep employees working and keep stores serving customers.

  • TEM processes work hand-in-hand with aggregators who may be managing MACDs in many retail environments.

  1. Be Nimble and Ready to React

Implementing these new systems allows you to be more in control of your operations. What inventory do I have, where is it, is it being used? You may also be able to renegotiate carrier contracts, which means you need complete visibility into all communications spend by carrier and service type, etc.

Many retailers are using this time to migrate to newer more cost-effective technologies (ex: SDWAN migrations, UCaaS deployments, migration to IP based voice). 

How can TEM save my business time & money?

  • Leverage TEM to prioritize most expensive sites for migration.

  • Manage and update new inventory deployed across the organization.

  • Confirm you're paying what you should for the new services (reconcile invoice charges to the new contracts).

With the changing landscape of e-commerce, it’s crucial to implement cost optimization into your processes to reduce inefficiencies and stay up to date with the latest technologies. We hope you have walked away with some tangible ways that TEM and MMS can make an impact in your business and help you achieve a competitive edge in the retail market.