Why Future-Focused Retailers Must Ready Their Tech Foundations

Embracing the latest tech innovation can be do or die for retailers, especially those courting millennial and Generation Z consumers. Augmented reality (AR), the metaverse, virtual assistants—retailers are racing after all of it. And for good reason: In 2021, e-commerce sales grew by 40% over the previous year, McKinsey found. Social commerce, or selling through social media channels, is expected to more than double from 2021 to 2025, reaching about $80 billion in retail sales.

Retailers clearly recognize the need to lean into digital solutions and new technologies. When asked whether they expected three-quarters or more of their revenue to come from digital sources within the next three years, 34% of retailers said yes, according to Workday’s latest global survey. That’s nearly a threefold increase over our 2019 report, and the highest among industries surveyed.

Yet the promise of selling more, through more channels, hardly means that tech investments should only be focused on the consumer experience. For retailers still operating with legacy enterprise resource planning (ERP) systems, there’s another, more fundamental technological advance to consider: an enterprise management cloud solution.

A retailer could be tempted to launch a whizbang tech innovation such as an AR experience that lets consumers virtually wander through a store. But if that retailer still relies on an outmoded ERP, its ability to maximize the value of that experience—both for the customer and for business performance—is inherently hamstrung. 

“Big data’s potential in retail has been trumpeted for years, but it’s often limited by ERPs that require specialized analysts to look at silos of data in search of specific insights or answers,” says Jennifer Johnson, senior industry director of retail and hospitality solutions marketing at Workday. Rather than democratize data analytics, these clunky systems make analytics a resource-intensive chore that still produces inherently limited results. 

There’s no question that technology will be at the core of next-generation retail growth. But in the rush to reach (and delight) consumers in new and unexpected ways, retailers must also recognize the need to make their data foundations future-ready—with real-time, intuitive analytics that incorporate information from across the enterprise. Because a decade from now, the idea of manually extracting data in order to analyze it is likely to seem as antiquated as carbon-copy receipts do today.

The Missed Opportunity Hiding in Plain Sight

From e-commerce to the metaverse, in-store QR codes to instant-delivery apps, there’s never been more retail data at the fingertips of decision-makers. Yet many retailers don’t have a way to seamlessly integrate and effectively make sense of that data deluge. Instead, they’re pouring that information into on-site ERPs or ones that have been lifted and shifted to the cloud, where all the potential insights sit in data silos. The result—low trust levels in data accuracy and significant time spent aggregating and validating data—could be fatal, given retail’s shrinking margins and looming economic uncertainty.

A cloud-native enterprise system, on the other hand, seamlessly pulls together data from across the enterprise (as well as external data from third-party solutions and industry best-in-class, purpose-built tools) into a single, unified platform. That means insights around everything from workforce planning to supply chain management, customer trends to future forecasts, aren’t hampered by functional blinders or fragmented data. 

Atlanta-based RaceTrac, which owns and operates more than 550 convenience stores, used to keep its financial data in three separate systems that were time-consuming and error-prone to manage and use. By deploying Workday’s cloud-based enterprise management system, RaceTrac unified its financial and human resources (HR) data—gaining more efficient processes and detail-rich data to drive higher profits. Finance automated 80% of its business functions while achieving a 75% reduction in internal queries.

An enterprise management cloud can also help businesses understand and address the needs of their own people. Business leaders can use an intelligent data core to track patterns and gain predictive insights, leveraging that information to manage and meet employee expectations while minimizing unwanted attrition. 

During the tumult of the pandemic, for instance, PVH Corp., which owns brands such as Calvin Klein and Tommy Hilfiger, used Workday to set up HR data risk profiles. When data analytics determined that single parents were at a higher risk of leaving the company, PVH proactively improved its backup care plan to boost employee happiness—and retention.

“A retailer’s success increasingly relies on its ability to connect people, financial, and operational data to business outcomes,” notes Workday’s Johnson. 

Future-Ready From the Ground Up

Every retailer knows consumers crave a consistent, frictionless experience across every touchpoint. The underlying data architecture powering a retailer’s business should deliver on that same goal. Instead, too many retailers struggle with legacy ERP systems that, over time, may have evolved into a clunky amalgamation of multiple solutions and quick-fix workarounds.

By adopting an enterprise management cloud that unifies data across all functions, retail leaders can gain a single point of truth for strategic decision-making, while empowering employees to engage with that data in powerful ways. Data analytics needn’t be limited only to a rarefied role or department. Instead, role-based native security enables everyone from FP&A analysts to front-line store managers to use intuitive tools for visualizing data trends and surfacing insights that are relevant to their role. And because it’s all in the cloud, it’s accessible anytime, anywhere—perfect for the new reality of hybrid and remote work.

At Hairhouse Warehouse, an Australia-based professional haircare and salon services provider, the finance function had to work with multiple sources of data imported and analyzed in spreadsheets, as well as inflexible, manual reporting and analysis processes. But after turning to Workday Adaptive Planning, finance now enjoys a friction-free experience that automates reporting at the push of a button, powering both faster decision-ready insights and more time to devote to strategic activities.

“Often, retailers already have the information they need to improve performance—even in a rapidly changing business environment—but accessing and analyzing that information is a barrier,” says Johnson. 

As retailers map future tech investments and digital strategies, they’d be wise to first assess whether their existing operational technology is capable of keeping pace with modern demands. By harnessing data more seamlessly and intelligently, a cloud-based enterprise management system can power business performance today and far into the future.