The highly competitive nature of the retail market, the disproportionately high growth of discount retailers in sectors like grocery, and the continued expansion of ecommerce is putting greater pressure on retailers’ profit margins than ever before, says Frank Lochbaum at KPS.

This is being reinforced by the consumers, who expect more value for money as standard, and will happily compare prices to ensure they get the best deal. To keep giving customers competitive prices, without eroding profit margins further, retailers need to optimise their operational infrastructure for maximum efficiency and productivity.

However, many are working in a legacy environment which doesn’t necessarily support new omnichannel, end-to-end processes – instead they are working in siloes across their organisation. A good place to start would be for these organisations to unify their business around the customer, and improving technology systems would be a beneficial first step in this process.

But many retailers are being faced with a ‘speculate to accumulate’ dilemma: do they work with their existing systems in the short term, or recognise that they cannot grow with their business, and invest in new technology now to give their business a platform for growth?

The answer to this is that both MUST be done, because it is not the technology alone that determines retail profitability – it is the business processes used in conjunction with this technology. For true operational efficiency, and therefore maximum productivity, retailers need to innovate both their systems and the processes that underpin their business.

Agile technology, combined with best practice processes that improve the end-to-end operational journey, can streamline the supply chain, order management and customer service capabilities around the needs of the consumer – and enable retailers to more effectively to deliver on shoppers’ increasing expectations and demands.

However, this innovation needs to be done in a way that does not disrupt the businesses day-to-day sales capabilities, or compromise the current customer experience in any way. To address this challenge, many retailers turn to the support of an expert technology partner, which can help them not only find the right technology to drive future revenue, but implement it and find the right business process to ensure it keeps on returning investment for their business.

Ultimately, getting the right operational processes in place is the most important part in ensuring profitability; technology alone cannot drive profit – it is the way in which it is used which unlocks its full capabilities.

And if retailers can underpin their systems with these best practice processes, they will be able to increase their operational systems to both make running their business more cost-effective, and being able to offer a more agile service to their customers.

By Frank Lochbaum is Managing Partner at KPS experts on designing, building and implementing the processes retailers need to operate profitably in a multichannel world.

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