How can retailers tackle rising costs by investing in technology?

Sometimes, adversity can bring opportunity. Here are some technologies that can help retailers stem the tide of rising costs.

The retail sector has to combat many challenges. Retailers are contending with the impacts of a tough economic landscape, such as rising inflation and interest rates, all of which are reducing footfall and squeezing margins to breaking point.

At the same time, they have to react to how the sector is rapidly changing, such as improving e-commerce capabilities, expanding delivery services and digital transformation to take advantage of new opportunities to collect and harness customer data.

UK retailers also face a bill of an estimated £3 billion in increased business rates on top of a massive rise in energy costs, and everything else mentioned.

Some high-profile casualties in the retail sector in the last few years have highlighted the critical need to change. It's increasingly clear the businesses that survive this challenging period and go on to future prosperity will be the ones that adapt fastest.

The most forward-looking retailers are looking at technology-based solutions to the problem of rising costs. New technologies and advances in connectivity, as well as Internet of Things (IoT) and analytics offer the biggest opportunities for transformation and increased efficiency.

Reducing energy costs

Heating and lighting stores, offices, warehouses and other premises are a massive overhead, especially as energy costs are only getting higher.

Retailers are therefore looking at Smart Building Technology that can measure precisely how buildings consume gas, electricity and water. Facilities teams monitor this data on a dashboard, which offers actionable insights on optimising energy usage. This could include reducing heating or air conditioning in areas of stores near doors and windows that are naturally warmer or cooler.

IoT sensors can be fitted to an existing heating, ventilation and air conditioning (HVAC) system. In warehouses or office buildings, where the introduction of hybrid working has reduced occupancy, facilities teams can direct heating and lighting levels only to the areas that are being used. This occupancy tracking can also help optimise everything from desk usage to car parking. At a time when energy costs are eating into profitability, this can have a huge impact on costs.

Finding new efficiencies in the supply chain

As well as bricks and mortar premises, retailers are looking at every aspect of operations, from their supply chain to fulfilment and delivery, to see where savings can be made.

Using Asset Tracking and Monitoring technology is becoming increasingly important as it automates tracking of stock at every stage in the supply chain and uses geofences to create alerts.

Through labelling with an embedded SIM, integrated connectivity and cloud applications, Asset Tracking and Monitoring gives complete visibility of stock at every stage of the journey. This can have a major effect on reducing supply chain inefficiencies, minimising loss and protecting margins by getting the right stock on shelves at the right time, at the right price.

Future-proofing retail through connectivity

Advances in connectivity have the potential to deliver huge operational efficiencies and improve sustainability too. Sustainability is a crucial topic within the retail sector and one that cannot be overlooked. Data shows that the retail supply chain currently contributes to 25% of greenhouse gas emissions (GHG) globally.¹

Consequently, more and more organisations are integrating sustainability principles into their core values and taking immediate action. For example, retailers are now using 5G and real-time analytics of data to establish a true picture of how sustainably they manage waste and, most importantly, how they can take corrective steps now to benefit the future.

Indeed, connectivity through 5G and IoT is the future of retail and the key to tackling rising costs. Transformation now ensures that retailers have the infrastructure in place to take advantage of breakthrough technologies that are just around the corner.

For instance, it may not be long before your food deliveries are being brought to you by miniature autonomous vehicles, communicating in real-time, to avoid congestion and self-plan the fastest routes – as was seen in the recent tests by Starship Technologies in Milton Keynes.²

Ultimately, it’s about improving the all-important customer experience. Technology can help us achieve this while also having a significant impact on tackling rising costs. This can only become more beneficial and relevant to retailers in the future as margins become increasingly tighter.