Retail 2023 – focusing on business basics when the market is in recession

November is typically the time in retail to focus on business and financial planning for the year ahead. This is always a difficult task to forecast in retail with the usual pressures of predicting trends, but this year will be particularly challenging here in the UK as there is so little stability in not only the economy, but the Government itself.

It’s been quite a year with a new monarch, new prime minister and multiple chancellors. Planning for 2023 against a backdrop of fluctuating energy costs, taxation, inflation, interest rates, foreign exchange rates and logistics, and manufacturing costs means we expect to see a ‘back to basics’ approach to business planning and technology investment for 2023.

The last two years have seen an accelerated spend on strategic IT programmes for two reasons, both driven by the pandemic:

• Massively disrupted business models particularly for physical store-based models. Many businesses moved from primarily instore experiences to online through necessity. Some have seen this as a transient change, others it has become a permanent shift in their business model and has required investment to shore up capabilities which had been rushed during the pandemic

• Pent up demand. With much of the economy disrupted or on hold, many large strategic programmes had to be put on hold because delivery capability wasn’t available with businesses paused and staff on furlough. Following the end of the pandemic, transformation programmes have struggled to get resourcing as so many businesses have started large scale transformation.

This year we have seen significant spending on large transformations as we head into a recession.

What does this mean for the CIO planning for the next 2-5 years? Where should they be focused?

• Finish what you started – transformation programmes tend to be strategic, meaning they will pay off in the longer term. When cashflow is tight, it is often strategic programmes which are cancelled because the short term is prioritised. Staying the course on long term investments is difficult but necessary for the future of the organisation.

• Prioritise margin – sales volumes are likely to be static or fall, so focusing on projects and investments that drive margin will help the cash position in the business. Technology often helps drive efficiencies, so this is a natural focus area.

• Invest in energy and sustainability programmes – there has been a lot of focus on net zero and sustainability and now there is an added incentive to reduce waste energy and to drive sustainable practices. Investing in this area not only helps drive the green agenda but will, in many cases, lower the operating costs of the business. Technology can drive some of these initiatives as well as provide complex monitoring and decision support systems.

• Create strong supply chain and logistics modelling – many organisations have already been focusing on reducing international reliance by bringing manufacturing closer to their target markets. This is particularly important for the UK with soaring international costs from the weak pound and increased transport costs. Having a capability to model changes to your supply chain will be important to support complex investment decisions.

How can Project One support the CIO Agenda?

• Portfolio Management to support decision making – the lifeblood of investment decision making and delivery management. We have worked with a number of customers this year to create portfolio capabilities which allow them to see both their in-flight technology investment progress and shape demand for short, medium and long-term investments. This helps to proactively prioritise resources and capabilities in conjunction with the business needs.

• Programme Assurance – looking at inflight large programmes and providing an independent view of the delivery and its efficiency, pinpoint issues and provide pragmatic and clear recommendations. This will address challenges which may impact the delivery speed, quality or cost.

• Programme Delivery – this is what we are known for. We shape and drive critical programmes with highly experienced delivery consultants to ensure your investments deliver. We do this across all sectors as well as having specific experience in retail and CPG.

• Programme Management Office – create and run a strong programme management office to ensure you have the right visibility of what is happening across your portfolio, and the right information to make critical decisions.

Do you need help with your retail planning process?

As well as Project One’s focus on delivery, the head of our retail capability has worked in strategic consulting for many years and can help you navigate investment planning. Reach out today for a conversation about your outlook for 2023 and key insights and experience from 2022.