Customer behavior is changing. Retail automation proves a must

Customer behavior changed in the past couple of years. Consumers have been facing a significant number of challenges. From COVID and working from home to growing concerns about the post-pandemic and war economy, consumers are juggling needs and wants before purchasing. While the emphasis is on personal economics, the purchasing decision will be based on value.

So, to remain competitive, the retail business must adapt to rapid changes in customer behavior and market trends by embracing retail automation.

Higher inflation leads to customer behavior changes, but there is hope

Online retail sales will grow by 6.1%, slower than in 2020-22, but their share of the total retail market will continue to increase. The main challenge for businesses will be managing rising raw material, logistical, labor, and energy costs.

In those times of economic uncertainty, European consumers are concerned about rising prices and are pulling back on spending, shows a McKinsey survey. Inflation-wary consumers will prefer to shop at discount stores. To counter this, retailers must lower their costs to offer discounts, encouraging consumers to buy.

Solution:

Automation can help mitigate those effects. Including assortment planning in the business process will allow organizations to use the obtained data to determine the best product assortment. This tool can reduce the need for costly overstocking or rush orders, ultimately leading to lower inventory carrying costs and better use of capital.

Many retail chains will also invest in automating their backend processes, reducing costs. By March 2023, Australian department store chain Myer will deploy 200 autonomous mobile robots to process seven out of ten online orders. Japan’s Aeon will collaborate with British retailer Ocado to build an automated warehouse in Japan by 2023 to manage stocks and basket goods for online deliveries.

Promotion skepticism

Another trend observed in another study is the growing skepticism among consumers toward brands’ promotional communications. Over a quarter of consumers did not believe the advertised original shelf prices. Despite significant investments in loyalty programs, clients need more trust to participate in them. Most participants in the study think they will not have access to a higher discount. This customer behavior

Solution:

In retail automation, there is a solution for promotion management and optimization. If retailers want to build trust again, they must manage a campaign that ensures that promotions are precisely what their customers need and be consistent. Using promotion management and omnichannel optimization pricing, a vital feature of the SAP Customer Activity Repository applications bundle could make the difference in ensuring the loyalty of a client or not.

The business can create a what-if simulation to predict financial performance with this solution. Factoring in the clients’ pain points is crucial in maintaining the livelihoods of campaigns and returning the investment needed for a profitable bottom line.

Consumer discount expectations don’t match reality. All surveyed consumers would like to benefit from discounts 11% higher on average than the real deals available. Retailers can reduce costs by optimizing their promotional activities. By using systems that automatically analyze consumer behavior and preference data, retailers can tailor their promotions to better align with customer needs and desires, ultimately leading to more effective campaigns and lower costs associated with wasted advertising spend.

Online shopping is on the rise

While the lockdown came with several changes, one that marks an essential adaptation for retail is the need it created for online retailers. The barrier to buying online was significant, considering the fear of online payments and a lack of willingness to try. People have gotten used to the processes and might prefer them to traditional brick-and-mortar stores. According to Statista, worldwide retail sales will be 24% made online by 2026.

As technology skepticism lowers, the number of online purchases will continue to rise, as it is as convenient for the consumer as it might be for the retailer.

Solution:

Online retail lowers costs on aspects that physical stores can’t afford to cut out. The need to keep an eye on replenishment planning rises. With assortment planning and replenishment planning, the best part of online retailing is that tools can automate some crucial aspects, like:

Reducing waste while responding promptly to changes in demand (with the forecast capabilities of those solutions)
Information-driven planning aids businesses in considering real-world requirements and limitations when ranking products according to chosen KPIs
Real-time inventory visibility and on-shelf availability

Sustainability initiatives prove necessary for customers and governments

There is increasing concern regarding global sustainability. Retailers must use more sustainable fabrics and sell brands that meet specific sustainability standards. In the food industry, plastic will become a thing of the past.

A study by the Economist Intelligence shows that in the coming years, European countries such as Spain, Italy, and the Netherlands are enforcing plastic bans and taxes, with retailers needing alternative packaging options. Sustainability is becoming a key focus in the fashion industry, with companies implementing changes to their packaging and material use. Regulators are also pushing for better consumer protection by introducing new privacy and data regulations in several countries. In the face of these challenges, retailers must consider automation to improve efficiency and reduce costs while also meeting the changing demands of consumers.

Solution:

Waste is a big challenge for retailers. Reduce inventory, markdowns, and waste with consistent planning that spans customer-centric assortments to intelligent allocation and product replenishment.

Allocation management is the solution retailers want to take advantage of. The feature enables fully automated in-season replenishment based on previously gathered data. It allocates it to different stores/storages based on the promotional forecast, store inventory, and capacity.

A store can limit the amount of waste produced by carefully planning the inventory and promotions. Minimizing waste becomes easy with all the features offered in an application bundle like SAP Customer Activity Repository.

Choose the right technology partner

Berg Software is a leading software services company that provides customized SAP CAR solutions to help businesses navigate the ever-changing landscape of customer behavior with retail automation. Berg’s experienced professionals work closely with clients to understand their business needs and implement tailored SAP CAR solutions that effectively lower retail costs and improve customer experiences. By leveraging its expertise in retail automation, Berg helps businesses stay ahead of the curve and drive growth by implementing a solution with real-time insights into customer behavior, inventory management, and sales performance.

Customer behavior is ever-changing, but the importance of adapting to retail automation remains constant. Count on us to deliver the best for the best