Retail and Hospitality: Adapting to Today, Preparing for Tomorrow

The retail and hospitality industries are constantly changing. But even with the lingering impacts of past disruption and the effects of new macroeconomic pressures, they’re still paving a way to success with innovation and flexibility.

For retail and hospitality leaders, constant change is their only constant, and they’ve felt that keenly over the past few years. But through it all, they’re finding a positive way forward through innovation and a willingness to adapt to change. 

Those themes rang through the retail and hospitality industry keynote hosted by Workday’s Chief People Officer Ashley Goldsmith at Workday Rising, our flagship customer event. Goldsmith started her career in the retail space, so she has a soft spot for the industry and a keen understanding of the challenges and opportunities that come its way. 

She opened the keynote by reiterating something that did not change during the last few years: Front-line workers are still absolutely essential to the success of retail and hospitality. Without an engaged and empowered front-line workforce, customers are unlikely to have a good experience, and even less likely to turn into loyal, returning customers. 

What’s Trending and What’s Ahead

So what are retail and hospitality leaders thinking about as they look to thrive in the future? Scott Rankin, strategy practice leader at KPMG, talked in the keynote about what industry leaders are focused on. Scenario planning is more important than ever. If there’s one thing that we learned from recent days, it’s to expect the unexpected. Companies are preparing ahead of time so they can pull the right levers and engage the right initiative when change comes again. In fact, Workday found that use of scenario planning among our customers increased by 30 times during pandemic disruption. 

For human resources professionals in these industries, finding, hiring, training, and retaining the right talent has been an enormous challenge, and continues to be. Wage inflation puts a strain on the balance sheets, and leaders feel pressure to make sure all their resources and people are being utilized in the most efficient way possible. Solid demand forecasting is a must-have for retailers and manufacturers. They need to be 100% positive they know where demand will be across geographies, channels, and categories, so money is invested in all the right places. 

Retail and hospitality organizations have access to billions of lines of data, from point-of-sale and e-commerce to loyalty programs and worker information. But often that data sits in disparate systems, making it difficult to get the answers leaders need. When companies can consolidate data and use it effectively, it can make a huge difference in efforts around personalization, promotional optimization, and pricing. 

Environmental, social, and governance (ESG) efforts are another area of highly intense focus for retail and hospitality. Consumers increasingly want to feel comfortable with the practices of the brands they purchase from, and regulatory agencies and shareholders are also turning their gaze on the ESG practices of these companies.

Looking forward, Rankin shared that the demise of physical retail has been highly overstated. The brick-and-mortar experience isn’t going away anytime soon, though commodity-driven markets will continue to lean heavily on e-commerce. Customers will still come into the store to touch, feel, and try on what they’re interested in buying. Differentiation will be driven by a return to the basics, such as ensuring that the physical store experience is engaging. And technologies such as augmented reality and virtual reality will have an impact, but not quite as fast as some may have predicted.

“We have an ability to set up everything as assumptions and then turn around and drive formulas for anything that’s variable on those assumptions.”

Amy Smith Chief Financial Officer Drury Hotels

Hospitality’s Positive Path Forward

Trends in hospitality and retail often follow a similar path, and the effects of the last few years are no exception. Amy Smith, chief financial officer of Drury Hotels, a hotel chain with over 150 locations in 26 states, spoke in the keynote about her experience and the lessons they’re learning. 

One important lesson is that effective collaboration across departments is a key ingredient to adapting and innovating in times of change. Smith shared that for Drury, partnership starts with trust and respect for each other. In particular, she and Drury’s chief information officer focus on staying in lockstep as they work on digital transformation initiatives. And a core element to the success of that strategy is having a dedicated IT resource sitting in multiple key groups, such as accounting, finance, and payroll. 

Those digital transformation initiatives are key ingredients, too. For example, Smith shared that Drury lost 80% of its revenue in one month during the pandemic, and at that point, the company had almost no ability to forecast effectively. Drury needed to solve its cash flow forecasting issue and had to resort to spreadsheets at one point. Workday Adaptive Planning provided a better alternative. As Smith shared, “That has transformed how our team interacts with the budget and forecast process. We have an ability to set up everything as assumptions and then turn around and drive formulas for anything that’s variable on those assumptions.” 

When Drury moved its payroll department from sitting under accounting and finance to under human resources and then back under accounting and finance, Workday allowed the team to make that change without disruption. As Smith said, “Those movements would not have been possible if we had teams getting up to speed on a brand new system. It’s been really helpful for us to have one platform.” With Workday, business process owners are able to run their own reports instead of having to enlist help from IT. And it’s also lowered some of the barriers to transformation, making it easier to move past “the old ways.” 

In the end, retail and hospitality leaders are taking what they’ve learned from the past, applying those lessons to present-day challenges, and topping it all off with a healthy dose of innovation. The end result? A clearer path to a successful future. 

You can watch the entire keynote on-demand here (registration required, replay available until April 2023).

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