Solutions and factors behind sustainable business growth

CEO and Co-Founder competitorcloud-based pricing software for brick-and-mortar retailers worldwide.

Recently, the retail industry has experienced a series of challenges unimaginable a decade ago. Although the retail industry has experienced major tests, it has also ushered in opportunities to show responsibility and resilience. Those who embrace the transformation have emerged stronger and laid the groundwork for their long-term relevance.

As always, consumers are one of the main drivers of change in retail. When Covid began to spread in 2020, consumers’ demands became clear: cleaner, more efficient and less wasteful practices. Gone are the days when retailers wondered whether sustainability was here to stay. Just a few years ago, retailers were figuring out whether their customers really cared about sustainability, or just said they did.

By 2022, sustainability has clearly left the “trends” sector and relegated to the “business as usual” sector. In 2021, sustainability will be rated as an important purchasing criterion by 60% of consumers worldwide. In the U.S., the figure is slightly higher than the global average of 61%.

sustainable business development

As consumer needs become more diverse and complex, so too are the ways to address corporate sustainability issues. Modern challenges force retailers to improve their approaches, strategies and operations and provide value to buyers that differentiates them from competitors. Whether it’s an affordable store or an exclusive, it’s important for customers to have a clear understanding of what types of products they’ll find and what value they’ll get. As a result, more and more retailers are setting goals to increase the credibility and accountability of their sustainability efforts, and to enhance their transparency and communication at the product and company level.

Furthermore, “sustainable business” is now being rethought, not only in terms of offering sustainable products on the shelf, but also from a business operations perspective. Retailers are beginning to incorporate sustainability into their strategies and cascade goals into business processes across the organization.

The Three Pillars of Sustainability and Retailing

While optimizing category planning, supply chain, and price management, retailers can focus on increasing sales, healthy margins, and improving customer satisfaction, while inadvertently neglecting sustainability aspects. It may not be obvious, but the above are the most important levers to shift to sustainability in the long run. The central enemies of sustainability are overproduction and overconsumption, and this is directly related to a retailer’s ability to optimize these three pillars.

Optimized assortment planning and replenishment ensure that sufficient and correct product sets are in stock and that carefully forecast long-term demand is met at any given time. Smart promotion management and optimized pricing can ensure even sales dynamics and prevent over-promotion. Conversely, poorly planned assortments and demand can cause disruptions in the supply chain, necessitating product promotions, which can lead to shortages or surpluses that prevent retailers from maintaining healthy metrics.

August 2022 became a vivid example of inaccurate category planning and replenishment. The situation got worse as products continued to pile up at one of the busiest warehouses in the United States. To clear shelves and stock overwhelmed warehouses with new merchandise, retailers often use excessive promotions to entice inflation-threatened consumers to buy more. While this scenario is difficult to predict, the consequences are easy to predict: retailers will lose profits and stoke hard-core consumerism.

Tech solutions to combat consumerism

Retailers occupy a unique position in the product lifecycle chain as “gatekeepers” between producers and consumers and can therefore play an important role in promoting the sustainability of consumption and production. With a unique opportunity to influence consumer behavior, retailers have a huge responsibility. However, this responsibility gives retailers the opportunity to drive not only sustainability across the board, but a profitable future.

Since price is one of the most important components of the customer experience, optimizing it is critical, as the cost of misleading prices is very high.

When setting initial prices, retailers encounter two possible environmental and bottom-line metric impact scenarios. If the initial price is not set properly, it may result in poor or slow sales, which may require promoting the product. After the promotion, the product returns to the normal price, and the high-low strategy needs to be adopted to finally clear the stock. So make sure your technical service provider is focusing on demand cross-elasticity from the start, because mistakes made at the beginning of the product life cycle can negatively impact bottom-line metrics, which is not sustainable in the long run.

add them up

Keeping your deep learning solutions up to date allows you to gain predictive impact of market shifts on sales dynamics and enable smart and thoughtful supply chain, procurement and pricing management from the start. In turn, this helps prevent outages from accidentally slowing or speeding up sales. Thus, this single step in the main business process prevents retailers from backlogs, surpluses and over-promotions, resulting in a solid foundation for healthy profit margins, responsible business operations and sustainable growth.

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