Retailers are used to seasonal peaks and troughs. But recent years have brought unprecedented unpredictability, necessitating a rapid acceleration of digitisation, greater reliance on e-commerce, and an increased need for data-driven insights to address supply chain constraints.
The economic decline has added to the pressure on retailers, along with the pervasive presence and threat of cyberattacks.
To “recession-proof” retail in 2023, innovative new technologies and services must be deployed to meet the demands of online shoppers and make those experiences as seamless as possible, as well as mitigate the cyber threat.
Cybersecurity will be front and centre for retailers
Cybersecurity will undoubtedly be a key issue for retailers in 2023, and a strong posture could be an effective way for retailers to stand out from the crowd.
According to the 2022 Verizon Data Breach Investigations Report, there were 629 recorded incidents in the retail industry, 241 of which resulted in data disclosure. The main types of retail attacks were the use of stolen credentials, phishing, and ransomware.
Of these attacks on retailers, 87 percent were external and 98 percent were financially motivated. Therefore, “seasonal” retail shopping can also be a shopping spree for criminals looking to hide amongst the increased transactional activity.
Unfortunately, in the event of a cyber incident, this can have a devastating effect on any retail brand and threatens to impact their bottom line at a time when they can least afford it. According to the Edelman Trust Barometer, trust in retailers has already dropped 3 percent in the last year. Another downside of a cyberattack can be damage to reputation. Smart retailers will therefore take all necessary precautions to protect their transactions and customer data – and their bottom line.
Placing mobile security front and centre
Consumers are not only shopping in online stores, but are increasingly doing so via their cell phones. Undoubtedly, this will also be an important part of retailers’ cybersecurity strategies, as 70 percent of retailers said increased use of cell phones is critical to staying relevant to consumers, according to Verizon’s 2022 Mobile Security Index report.
The report also found that 88 percent of retailers are concerned that a mobile security breach could have a lasting impact on their brand or customer loyalty, while 41 percent said it is a daunting security challenge.
Mobile e-commerce is not new to retailers, but mobile devices are a growing concern for retailers, with a steady increase in significant cyberattacks on mobile devices over the past year. This challenge is exacerbated by the use of connected devices (Internet of Things) in the retail supply chain, which are used to capture important customer data. There has been a 22 percent year-over-year increase, resulting in data or system outages due to vulnerabilities in these technologies.
Recession-proofing will be commonplace
Retailers have long incorporated cyclical buying behaviour into their overall strategy. Thanks to the turmoil of recent years, they now face economic storms, a global pandemic and war between Russia and Ukraine.
Retail strategies increasingly assume that a rolling recession will continue into 2023. That means working to reduce fixed costs across the board while proactively seeking opportunities for data-driven consumer campaigns.
Technology adoption will increase
We knew from Verizon’s first Future of Work survey, conducted with Longitude (a Financial Times company), that the Internet of Things (IoT) and artificial intelligence and machine learning (AI/ML) were investment priorities for retailers. Our later survey found that not only do these technologies remain a priority, but many respondents plan to accelerate adoption.
More respondents in retail than any other sector plan to prioritise investment in the Internet of Things over the next two years. AI/ML was another technology priority, cited by 44 percent of retail respondents. The only sector where more companies saw AI/ML as a high priority was professional services.
The crisis has also motivated retailers to strengthen other capabilities, with 78 percent saying they will increase their investment in data analytics. This is a tool that can help them understand and predict customer behaviour. This has changed significantly during the crisis and will be critical as retailers continue to move toward a digital customer experience.
About two-thirds expect to increase their spending on core network technologies, and 46 percent plan to invest more in 5G. This shows that many retailers are preparing to take advantage of a new generation of innovative applications.
Omnichannel will be the defacto
Creating a fluid and responsive omnichannel experience for customers can be a daunting proposition for any retailer. It involves so much more than matching the right digital tech to the right customer expectations.
Navigating the complexity of integration on a foundation of omnichannel connectivity is critical to pulling it all off. Consider the prospect of making it work for a large retailer, where digital innovation doesn’t just need to work in one place but with and across hundreds of other locations. The shopper then has access to a personalised experience, access to discounts, payment options and 24/7 shopping access/
In 2023, we expect to see retailers including digital roadmaps as part of their customer experience strategies to focus on delivering the same experience for shoppers from their physical store to flow through online and digital channels. This will enable retailers to shape the right strategy for core-to-edge innovation and to recognise that a likely first stop on that roadmap will be to build a more reliable and agile network.
Robert Le Busque is regional vice president for Asia Pacific at Verizon Business Group.