To Boost Agility (Even More), Retailers Must Double Down on Data

Retail is no stranger to organizational agility. In fact, the industry outpaces other sectors when it comes to understanding the importance of digital revenues. By 2024, more than two-thirds of retail income is projected to be digital, and 82% of retailers say they’re confident they can drive digital growth effectively, according to a global survey from Workday. 

But the retail sector is also uniquely vulnerable to economic fluctuations and shifting consumer behaviors. In recent months, retailers have reported both higher costs and slower sales, pushing projections far lower than last year’s buoyant forecasts. Some brands, saddled with ballooning inventory levels that stem from once-fervent consumer demand and erratic supply chain delays, are now scrambling to pare back, further impacting profit margins. Meanwhile, retailers and economists alike are anxiously tracking if and when inflation-wary consumers will adjust their spending patterns.

“Retailers demonstrated an incredible capacity to flex and adjust during the pandemic, but it’s not like that need for agility is behind us,” says Jennifer Johnson, senior industry director of retail and hospitality solution marketing at Workday. “If anything, recent events and widespread uncertainty in the industry highlight that retailers must be poised to pivot as their default state.”

Even those retailers that thrived during the pandemic, by flexing agility and swiftly reckoning with new realities, must actively work to maintain that competitive edge. Because agility isn’t a set-it-and-forget-it capability—it’s one that needs continuous attention. Here are three ways retailers can supercharge their ability to flex during times of flux, by prioritizing their data in the here and now.

Bust Data Silos to Unlock Insights

Retailers already understand the importance of data—they’re awash with it. Many retailers have dozens of digital systems that span everything from point of sale, customer engagement, and foot-traffic details to warehouse management, contingent labor pools, and store information.

But too often, all that data is stuck in disparate systems and siloed by function. Finance, planning, marketing, and human resources (HR) may have little coordination or information sharing. As a result, data analytics rarely reaches the scale or level of insight required to deliver on its full promise. More than 1 in 3 retail executives (35%) cite access to high-quality usable data as one of the biggest barriers to achieving their transformation goals, according to a Workday report on digital transformation.

“The breadth and complexity of retailers’ data is only increasing—and often exponentially,” says Johnson. “But you can’t turn fragmented data into decision-ready insights, at least not at the speed and ease that retailers need right now.” 

To drive swift decision-making, retailers need a data ecosystem where all information works in concert and in real time. They need more than traditional enterprise resourcing planning (ERP)—they need an enterprise management cloud solution. This technology enables data to flow seamlessly across systems, with data always accessible in real time. It provides a complete picture of finance, workforce, and operations. And it offers flexibility, allowing businesses to change their processes to drive growth.

Build a Nimble, Skills-Focused Workforce

In the pandemic’s first year, e-commerce growth accelerated by a factor of two to five times. Retailers have also been early adopters of emerging, evolving technology—such as Sephora’s augmented reality app that allows customers to virtually try on makeup, Nike selling branded non-fungible tokens (NFTs), and forays into the metaverse by Gucci and Forever21. 

But, like all things retail, the solution is less “this, not that” and more “yes, and.” Even as retailers race to make digital investments, 84% of retail execs report that consumers are seeking experiences outside the home, according to Deloitte’s “2022 Retail Industry Outlook”. That’s prompting investments to blend e-commerce with physical stores, to reimagine brick-and-mortar locations as community gathering spaces, and even to reconfigure layouts to accommodate in-person shopping alongside on-site order fulfillment. 

One challenge that could slow such shifts? Talent—and a less-than-comprehensive view of workforce skills. In the Workday survey, half of retailers say their teams lack at least some of the skills needed to meet the needs of the business—such as the ability to work closely with new technologies. And nearly the same percentage expect a shortage in skilled workers for analytics and IT positions, Deloitte found.

Retailers need a comprehensive view of workforce skills and the associated costs to deploy labor in a fast, flexible, and cost-effective manner. When HR’s people data is rolled into the same conversation as finance and strategy, retailers can more easily mine internal talent and optimize scheduling for greater agility and labor cost savings.

Discount Tire discovered this firsthand when it upgraded its flagging 20-year-old on-premise system to Workday’s cloud-based system. With self-serve reporting capabilities and intuitive analytics, the solution democratizes data and adds instant capacity to finance and HR teams. Since the implementation, Discount Tire has doubled its headcount while spending 50% less time onboarding new employees and saving $119,000 annually in payroll headcount avoidance.

Look Further Back to Accelerate Ahead

Eyeing the horizon is a business imperative, of course. But historical data can offer retailers rich insights on what drives performance over time—and help them accelerate even faster into the future.

Yet barriers persist. For one, retailers are quick to adopt (and abandon) third-party tech, which means loads of small data silos that require labor-intensive manual extraction. For another, when on-site ERPs are converted to a cloud-based system, only a year or two of data is typically imported. And that data is usually only summary level, lacking the rich details needed to chart historical trends.

The answer: a self-service analytics solution, built into your system of record, that blends existing finance and people data with external data to deliver critical insights through custom dashboards. This eliminates time-consuming extraction while preserving long-term data needed to identify correlations and trends. In legacy ERP systems, data is stored in relational databases, so retailers have to extract the data before it can be analyzed for insights. Cloud-based systems transform the data into insights—without having to extract the data first.

Better financial forecasting and analytics made all the difference for the mobile device accessories company ZAGG. Inaccurate demand forecasts resulted in pricey overnight air freight for products that, with better planning, could have been shipped via less costly ocean freight. After developing accurate, data-driven product forecasting and improved visibility into consumer demand and sales projections, ZAGG saved $8 million in the first year simply by fixing its freight issues. 

The future of retail may be as hard to predict now as it was two years ago—and as it will be in the years ahead. But retailers are keenly aware that the need for agility is a constant they can count on. And without rich, real-time, comprehensive data at their fingertips, retailers simply can’t make swift data-driven decisions with confidence.

As Workday’s Johnson notes, “In the race to evolve and adjust, the retailers that pull ahead are more likely to be the ones that have readied their foundation, to make the most of the data they have now and the data they might not even know they need yet.”