In Part 1 of this blog series, we examined how retail CFOs are leveraging technology, specifically advancements in e-commerce and mobile communications, to stay better connected within a fluid and evolving consumer culture. At the same time, however, the broadened role of retail CFO means these executives may continue to face operational challenges to stability and future growth that only powerful internal technology systems can remedy.
Individually Engaging the Masses: Data Analytics and the Discerning Customer
On the surface, the consensus among retail executives is that 2015 is poised to be a year of substantial growth, with 70 percent of C-suite executives recently surveyed by GE Capital expecting revenues to increase over the next 12 months by an average of 5.8 percent. Such confidence is undercut, however, by the fact that consumers seem hesitant to match such bullishness, with recent research by Deloitte revealing that a majority are still in a recessionary mindset, wary of the current economy and cautiously monitoring spending.
What this means for retail CFOs is that today’s audiences are likely to pass up traditional marketing with flashy gimmicks, instead selectively seeking out brands that offer products and services directly aligned with their personal preferences, tastes, and worldviews. To meet these requirements, CFOs are looking to technology systems that include robust business intelligence and data analytics capabilities to capture consumer preferences, behaviors, and buying habits, in order to create more targeted campaigns with greater impact. Such business intelligence and data analytics applications are growing in popularity with retail executives, with data analytics deemed “critically important” by 56 percent of respondents to the KPMG Global Consumer Executive “Top of Mind” Survey.
A Global Focus for the Retail CFO: Preventing Supply Chain Disruptions
At the same time that executives are narrowing their focus to appeal to the individual customer, CFOs are simultaneously looking to widen and expand their operations to support a more globalized business model, ensuring efforts across the retail supply chain are financially, operationally, and strategically sound. While the benefits of globalization include broader access to labor, material, and partner resources, such expansion can also expose retailers to new vulnerabilities, as adding more steps in the supply chain means more checkpoints, and greater opportunity for breakdown, with four in five surveyed businesses reporting they had experienced at least one instance of supply chain disruption in the past 12 months. Avoiding supply chain disruptions can be critical, as a recent Accenture consulting study noted an average disruption can reduce shareholder value in affected companies by 7 percent.
Leveraging Industry-Specific ERP Systems to Mitigate Risk & Optimize Operations
To address a broad range of challenges spread across departments and continents, retail CFOs are increasingly looking to technologies like industry-specific Enterprise Resource Planning (ERP) systems not only to help mitigate risk, but also to optimize all facets of their operations. Such systems provide the visibility and control required to streamline, organize, and manage interactions at every intermediary, reducing the potential for timely and costly setbacks.
Because they are built with industry-specific requirements in mind, such verticalized solutions are often able to provide retailers with a single solution that meets virtually all of their needs. For retailers, these systems cover all areas of channel management, including point of sale, e-commerce, contact center, marketing, and social as well as retail operations, which include store operations, supply chain and logistics, and salesforce automation. These ERP solutions also deliver platform benefits that include cloud and on-premise options; mobile capability; workflow management; interoperability; unified service desk; integrated financial management; integrated HR, payroll, and skills profiles; as well as business intelligence, reporting, and analytics.
The Future Financial Frontier: Expansion Meets Innovation
The bottom line is that as retail CFO responsibilities continue to broaden, technologies are becoming smarter, communities are becoming more connected, the distance between retailers and their target audiences is shrinking, and the sophistication of internal systems is growing. To meet both customer-facing demands as well as internal operational challenges that may span the globe, retail CFOs are seeking new and innovative ways to apply technology solutions to maximize profit and optimize operations. These technologies, detailed further in our Industry Brief, “The New Financial Frontier: How Retail CFOs are Leveraging Technology to Optimize Growth,” can help executives realize the promise of engagement, connection, and relationship among a complex fabric of consumers, partners, and resources, all leading to unprecedented retail growth and success.
Learn more about the author, Brion Reusche.
McCarrick, Bob, “What’s Driving Mid-Sized Company Growth Strategies?” GE Capital Corporate Finance, p.2, http://www.geccf.com/GECA_Document/GECCF_Whats_Driving_Mid-Size_Company_Growth_Strategies_2014.pdf
“2015 Consumer Products Industry Outlook,” Wall Street Journal-Deloitte Insights, February 25, 2015, http://deloitte.wsj.com/cfo/2015/02/25/2015-consumer-products-industry-outlook/?mod=wsjcfo_hp_deloitte
“Transforming for Growth: Consumer Business in the Digital Age,: Global Consumer Executive Top of Mind Survey 2014” KPMG, p.4, https://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/Transforming-for-growth-Consumer-business-in-the-digital-age-O-201407.pdf
Burchill, Jeffrey, “The Financial Risk Lurking in Your Supply Chain,” CFO, February 25, 2015, p.2, http://ww2.cfo.com/supply-chain/2015/02/financial-risk-lurking-supply-chain/